1
Exhibit 10.1
CONFORMED COPY
ORGANIZATION AGREEMENT
AMONG
LIBERTY MEDIA CORPORATION,
TCI MUSIC, INC.,
MTV NETWORKS, A DIVISION OF VIACOM
INTERNATIONAL INC.,
MTVN ONLINE PARTNER I LLC,
MTVN ONLINE INC.,
IMAGINE RADIO, INC.,
SONICNET, INC.,
THE BOX WORLDWIDE INC.,
VJN LPTV CORP.
AND
MTVN ONLINE L.P.
DATED AS OF JULY 15, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1. Certain Definitions................................................................................ 2
1.2. Additional Definitions............................................................................. 9
ARTICLE 2
CLOSING
2.1. Execution and Delivery of Operative Agreements..................................................... 12
2.2. Pre-Closing Capital Contributions and Closing Contributions........................................ 13
2.3. Delivery of Contributions and Partnership Interests................................................ 13
2.4. Delivery of Satellite Services, Inc. Notice........................................................ 14
2.5 Transfer of Domain Names........................................................................... 14
2.6. Transfer of VJN LPTV Assets........................................................................ 14
2.7 Transfer of Equity Interests in Box Italy.......................................................... 15
2.8 No Transfers, Etc.................................................................................. 15
ARTICLE 3
COVENANTS
3.1. Employees.......................................................................................... 15
3.2. Rebates of Launch Fees............................................................................. 18
3.3. Interactive Music Channel.......................................................................... 18
3.4. The Telstra Agreement.............................................................................. 19
3.5. The EMAP Agreements................................................................................ 20
3.6. Box Holland........................................................................................ 20
3.7. Qualifications to Sections 3.4, 3.5 and 3.6........................................................ 21
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TABLE OF CONTENTS
(Continued)
Page
3.8. Cooperation for Financial Reporting................................................................ 21
3.9. MTVN Efforts....................................................................................... 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE MTVN ENTITIES
4.1. Due Incorporation; Good Standing................................................................... 22
4.2. Due Authority; Valid, Binding and Enforceable...................................................... 22
4.3. No Violation of Laws or Agreements................................................................. 22
4.4. Financial Statements............................................................................... 23
4.5. Contracts.......................................................................................... 23
4.6. No Changes......................................................................................... 24
4.7. No Brokerage....................................................................................... 24
4.8. Absence of Litigation.............................................................................. 25
4.9. No Real Property; Totality and Condition of Assets................................................. 25
4.10. Compliance with Laws; Permits...................................................................... 25
4.11. Contribution of Assets; Operation of Business...................................................... 26
4.12. Absence of Liabilities............................................................................. 26
4.13. Employee Benefits.................................................................................. 27
4.14. Employees.......................................................................................... 28
4.15. Intellectual Property.............................................................................. 28
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIBERTY
5.1. Due Incorporation; Good Standing................................................................... 29
5.2. Due Authority; Valid, Binding and Enforceable...................................................... 29
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TABLE OF CONTENTS
(Continued)
Page
5.3. No Violation of Laws or Agreements................................................................. 29
5.4. No Solicitation.................................................................................... 30
5.5. AT&T/Liberty Agreement............................................................................. 30
ARTICLE 6
REPRESENTATIONS AND WARRANTIES BY TCI MUSIC,
SONICNET AND BOX
6.1. Due Incorporation; Good Standing................................................................... 30
6.2. Due Authority; Valid, Binding and Enforceable...................................................... 30
6.3. No Violation of Laws or Agreements................................................................. 31
6.4. Subsidiaries....................................................................................... 31
6.5. Financial Statements............................................................................... 32
6.6. Contracts.......................................................................................... 32
6.7. No Changes......................................................................................... 33
6.8. No Brokerage....................................................................................... 33
6.9. Absence of Litigation.............................................................................. 33
6.10. Real Property; Totality and Conditions of Assets................................................... 34
6.11. Environmental...................................................................................... 35
6.12. Contribution of Assets; Operation of Business...................................................... 36
6.13. Compliance with Laws; Permits...................................................................... 36
6.14. Taxes.............................................................................................. 37
6.15. Intellectual Property.............................................................................. 38
6.16 [Intentionally Left Blank]......................................................................... 39
6.17. Absence of Liabilities............................................................................. 39
6.18. Employee Benefits.................................................................................. 39
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TABLE OF CONTENTS
(Continued)
Page
6.19. Certain Restrictive Provisions..................................................................... 41
6.20. Employees.......................................................................................... 41
6.21. Agreements......................................................................................... 42
6.22. Year 2000 Compliance............................................................................... 42
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1. Survival........................................................................................... 43
7.2. Indemnification by Viacom, Imagine and VLLC........................................................ 43
7.3. Indemnification by TCI Music, SonicNet and Box..................................................... 44
7.4. Indemnification by Liberty......................................................................... 46
7.5. Indemnification by the Partnership................................................................. 46
7.6. Tipping Amount; Limitation on Indemnification...................................................... 47
7.7. Exclusive Remedy................................................................................... 47
7.8. Indemnification Procedures......................................................................... 47
7.9. Subrogation........................................................................................ 48
ARTICLE 8
MISCELLANEOUS
8.1. Table of Contents; Headings........................................................................ 48
8.2. Governing Law...................................................................................... 48
8.3. Severability....................................................................................... 49
8.4. Amendments......................................................................................... 49
8.5. Counterparts....................................................................................... 49
8.6. Entire Agreement................................................................................... 49
8.7. No Presumption..................................................................................... 49
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TABLE OF CONTENTS
(Continued)
Page
8.8. Binding on Viacom.................................................................................. 49
8.9. Parties in Interest; Limitation on Rights of Others................................................ 49
8.10. Waivers; Remedies.................................................................................. 50
8.11. Further Assurances................................................................................. 50
8.12. Public Announcements............................................................................... 50
8.13. Costs and Expenses................................................................................. 50
8.14. Notices............................................................................................ 50
8.15. Jurisdiction; Consent to Service of Process........................................................ 52
8.16 Exceptions to Representations and Warranties....................................................... 52
8.17 Obligations of TCI Music and Liberty............................................................... 53
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ORGANIZATION AGREEMENT
ORGANIZATION AGREEMENT, dated as of July 15, 1999, among
Liberty Media Corporation, a Delaware corporation ("Liberty"), TCI Music, Inc.,
a Delaware corporation ("TCI Music "), MTV Networks ("MTVN"), a division of
Viacom International Inc., a Delaware corporation ("Viacom" ), MTVN Online
Partner I LLC, a Delaware limited liability company ("VLLC"), Imagine Radio,
Inc., a California corporation ("Imagine"), MTVN Online Inc., a Delaware
corporation ("MTVN Online"), SonicNet, Inc., a Delaware corporation
("SonicNet"), The Box Worldwide Inc., a Florida corporation ("Box"), VJN LPTV
Corp., a Delaware corporation ("VJN LPTV"), and MTVN Online L.P., a Delaware
limited partnership.
VLLC, Imagine, SonicNet and Box desire to jointly own and
operate the Business (as such term is defined in the Partnership Agreement).
Contemporaneously herewith, VLLC, Imagine, SonicNet and Box
are entering into an Agreement of Limited Partnership dated as of the date
hereof (as such Agreement of Limited Partnership may from time to time be
amended, modified or supplemented in accordance with its terms, the "Partnership
Agreement"), pursuant to which VLLC, Imagine, SonicNet and Box will form MTVN
Online L.P. (as such entity may exist in partnership form or in a reorganized,
corporate or other form, the "Partnership").
In connection with the formation of the Partnership and the
operation of the Business, the parties hereto desire that (a) SonicNet shall
transfer to SonicNet LLC, a Delaware limited liability company whose sole member
is SonicNet ("SonicNet LLC"), pursuant to the SonicNet LLC Contribution
Agreement (as defined below), the SonicNet LLC Assets and the SonicNet LLC
Liabilities (each as defined below), (b) Box shall transfer to The Box Worldwide
LLC, a Delaware limited liability company whose sole member is Box ("Box LLC"),
pursuant to the Box LLC Contribution Agreement (as defined below), the Box LLC
Assets and the Box LLC Liabilities (each as defined below), (c) MTVN shall
transfer to VLLC, pursuant to the MTVN-VLLC Contribution Agreement (as defined
below), the MTVN-VLLC Assets and the MTVN-VLLC Liabilities (each as defined
below), (d) MTVN Online shall transfer to VLLC, pursuant to the MTVN Online
Contribution Agreement (as defined below), the MTVN Online Assets and the MTVN
Online Liabilities (each as defined below), (e) Box shall transfer to MTVN,
pursuant to the Box-MTVN Assignment Agreement (as defined below), the Box
Employment Contracts (as defined below), (f) SonicNet LLC and Box LLC shall
accept the SonicNet LLC Assets and the Box LLC Assets, respectively, and assume
the SonicNet Liabilities and, the Box Liabilities, respectively, (g) VLLC shall
accept the MTVN Online Assets and the MTVN-VLLC Assets and assume the MTVN
Online Liabilities and the MTVN-VLLC Liabilities and (h) MTVN shall accept and
assume the Box Employment Contracts.
In connection with the formation of the Partnership and the
operation of the Business, (a) SonicNet shall contribute to the Partnership,
pursuant to the SonicNet Contribution Agreement (as defined below), all of the
membership interests in SonicNet LLC (the "SonicNet Membership Interests"), in
exchange for which SonicNet shall receive a 8.75% interest in the Partnership as
a Limited Partner (as defined in the Partnership Agreement), (b) Box shall
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contribute to the Partnership, pursuant to the Box Contribution Agreement (as
defined below), all of the membership interests in Box LLC (the "Box Membership
Interests"), in exchange for which Box shall receive a 1.25% interest in the
Partnership as a Limited Partner, (c) VLLC shall contribute to the Partnership,
pursuant to the VLLC Contribution Agreement (as defined below), the VLLC Assets
and the VLLC Liabilities, in exchange for which VLLC shall receive a 1% interest
in the Partnership as the General Partner (as defined in the Partnership
Agreement) and a 69% interest in the Partnership as a Limited Partner, (d)
Imagine shall contribute to the Partnership, pursuant to the Imagine
Contribution Agreement (as defined below), the Imagine Assets and the Imagine
Liabilities ( each as defined below), in exchange for which Imagine shall
receive a 20% interest in the Partnership as a Limited Partner, and (e) the
Partnership shall accept the SonicNet Membership Interests, the Box Membership
Interests, the VLLC Assets and the Imagine Assets and assume the VLLC
Liabilities and the Imagine Liabilities.
The parties desire to set forth herein the terms and
conditions of the foregoing.
NOW, THEREFORE, in consideration of the premises and other
covenants and conditions contained herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1. Certain Definitions. As used in this Agreement, the
following terms shall have the meanings specified below:
"Additional Contributions" means Capital Contributions (as
defined in the Partnership Agreement) made pursuant to Section 3.03(a), (b) or
(c) of the Partnership Agreement.
"Affiliate", when used with respect to a specified Person,
means any other Person that directly, indirectly or through one or more
intermediaries Controls, is Controlled by or is under Common Control with, such
Person. Notwithstanding the foregoing, (i) neither the Partnership nor any
Person Controlled by the Partnership shall be deemed an "Affiliate" of any
Partner or of any Affiliate of a Partner, (ii) no Partner or any Affiliate
thereof shall be deemed to be an "Affiliate" of any other Partner or any
Affiliate thereof solely by virtue of its Partnership Interest (as defined in
the Partnership Agreement), (iii) no Person other than Viacom Inc. and its
Controlled Affiliates shall be deemed to be an Affiliate of Viacom Inc. or any
Controlled Affiliate of Viacom Inc., (iv) no Person other than TCI Music and its
Controlled Affiliates shall be deemed to be an Affiliate of TCI Music or any
Controlled Affiliate of TCI Music and (v) no Person other than Controlled
Affiliates of Liberty (other than TCI Music and its Controlled Affiliates) shall
be deemed to be an Affiliate of Liberty.
"Agreement" means this Organization Agreement, including all
Schedules and Exhibits hereto, as the same may be amended or modified from time
to time.
"AT&T/Liberty Agreement" means the agreement dated March 9,
1999 between Liberty and AT&T Corp. ("AT&T") pursuant to which, among other
things, Liberty has certain
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rights with respect to certain bandwidth on the AT&T cable systems (the "AT&T
Systems") for interactive television programming (the "Access Provisions").
"Box-MTVN Assignment Agreement" means the Box-MTVN Assignment
Agreement dated as of the date hereof between Box and MTVN.
"Box Contribution Agreement" means the Box Contribution,
Assignment and Assumption Agreement dated as of the date hereof between Box and
the Partnership.
"Box Holland License Agreement" means the License Agreement
dated as of the date hereof between Box LLC and Box.
"Box LLC Assets" means the Box LLC Assets as defined in the
Box-LLC Contribution Agreement.
"Box-LLC Contribution Agreement" means the Box-LLC
Contribution, Assignment and Assumption Agreement dated as of the date hereof
between Box and Box LLC.
"Box LLC Liabilities" means the Box LLC Liabilities as defined
in the Box-LLC Contribution Agreement.
"Box Service" means the programming service currently marketed
by Box.
"Business Day" has the meaning set forth in the Partnership
Agreement.
"Closing Capital Contribution" means with respect to each of
Tune and MTVNS and their respective Affiliates, an amount in cash such that,
after taking into account such amount and the parties' Pre-Closing Capital
Contributions (which shall be deemed to have been contributed as Capital
Contributions to the Partnership), the parties' respective total Capital
Contributions to the Partnership, prior to giving effect to any of the
contributions to be made to the Partnership pursuant to the applicable
Contribution Agreements, reflect their respective percentage Partnership
Interests.
"Contracts" means, with respect to any Person, all contracts,
commitments, agreements and arrangements to which such Person is a party or by
which it is bound.
"Contribution Agreements" means, collectively, the Box-LLC
Contribution Agreement, the SonicNet-LLC Contribution Agreement, the MTVN-VLLC
Contribution Agreement, the Box Contribution Agreement, the Imagine Contribution
Agreement, the SonicNet Contribution Agreement and the VLLC Contribution
Agreement.
"Control" has the meaning set forth in the Partnership
Agreement.
A "Controlled Affiliate" has the meaning set forth in the
Partnership Agreement.
"Database Agreement" has the meaning set forth in the
Partnership Agreement.
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"ERISA Affiliate" means with respect to any specified Person,
any other Person which is treated as a single employer with such specified
Person under Section 414(b), (c), (m) or (o) of the Code.
"Excluded Tune Assets" shall mean, collectively, (i) the
Agreement dated on or about July 1997 (the "Telstra Agreement") between SonicNet
and Telstra-Multimedia Pty ACN ("Telstra") and any rights to use the Trademarks
in the Territory (as such terms are defined therein) thereunder, (ii) all equity
interests in VJN LPTV and The Box Worldwide-Europe, B.V. ("Box Europe") and all
assets of Box Europe immediately prior to the Closing, including its equity
interest in, Video Jukebox Network Europe, Ltd., The Box Music Network S.L., The
Box Italy, S.R.L. ("Box Italy") and The Box Holland, B.V. ("Box Holland", and
collectively with the other subsidiaries whose equity interests are referred to
in this clause (ii), the "Excluded Subsidiaries"), and all agreements and
undertakings relating to Box Holland (including without limitation the Joint
Venture Agreement dated as of December 14, 1995 by and among The Box
Worldwide-Europe B.V., Quote Beheer BV and Box Holland (the "Box Holland Joint
Venture Agreement") and all agreements annexed thereto or referenced therein,
including, without limitation, the Initial Licensing Agreement between Video
Jukebox Network, Inc. ("VJN") (now known as Box), and Box Holland and the Second
License Agreement between Box and Box Holland (collectively with the Box Holland
Joint Venture Agreement, the "Box Excluded Agreements"), (iii) the IP Rights
Agreement (the "IP Rights Agreement") dated October 30, 1996 by and among VJN,
Video Jukebox Network International Limited and EMAP plc ("EMAP"), (iv) the
Share Purchase Agreement dated October 30, 1996 by and between VJN and EMAP (the
"Share Purchase Agreement," and collectively with the IP Rights Agreement, the
"EMAP Excluded Agreements") and (v) all equipment and transmitter sites used
exclusively in the Stations' operations.
"GAAP" has the meaning set forth in the Partnership Agreement.
"Governmental Entity" means any nation or government, and
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Imagine Assets" means the Imagine Assets as defined in the
Imagine Contribution Agreement.
"Imagine Contribution Agreement" means the Imagine
Contribution, Assignment and Assumption Agreement dated as of the date hereof,
between Imagine and the Partnership.
"Imagine Liabilities" means the Imagine Liabilities as defined
in the Imagine Contribution Agreement.
"Intellectual Property" means, with respect to any Person, (i)
all patents, copyrights, trademarks, service marks, trade identification, trade
dress, trade names, copyrights, trade secrets, know-how, proprietary
information, mask work rights, database rights, publicity rights, privacy
rights, and other rights of a similar nature for which legal protection,
statutory, common law, or otherwise may be obtained, in the United States and/or
any other country or
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jurisdiction; (ii) all pending applications to register or otherwise obtain
legal protection for any of the foregoing; (iii) all rights to make application
in the future to register or otherwise obtain legal protection for any of the
foregoing; (iv) all rights or priority under national laws and international
conventions with respect to any of the foregoing; (v) all continuations,
continuations-in-part, divisions, renewals, extensions, patents of addition,
reexaminations, or reissues of any of the foregoing and all related applications
therefor; (vi) all goodwill associated with any of said trademarks, service
marks, trade identification, trade dress and trade names; and (vii) all rights
to ▇▇▇ with respect to past and future infringements of any of the foregoing,
which are owned, used or held for use by such Person.
"knowledge" means, (i) with respect to TCI Music or MTVN (or
Viacom), the actual knowledge of any executive officer or director of TCI Music
or Viacom, respectively, and (ii) with respect to the other Tune Entities or the
other MTVN Entities, the actual knowledge of any officer or director of such
other Tune Entity or other MTVN Entity, as applicable.
"Laws" means all statutes, codes, ordinances, decrees, rules,
regulations, orders, judgments, decrees, or general principles of common and
civil law and equity, in any case binding on or directly affecting the Person
referred to in the context in which such word is used.
"License" means any option, license, or agreement of any kind
relating to the exercise, use, non-use, registration, enforcement,
non-enforcement or remuneration for any Intellectual Property right.
"Lien" means any lien, charge, claim, pledge, security
interest or other encumbrance of any kind, except as may exist under federal or
state securities laws or except as created by or resulting from this Agreement.
"LMA Agreement" means the Local Marketing Arrangement dated as
of the date hereof between Box LLC and VJN LPTV.
"Loss" means any losses, costs, expenses, damages, Taxes,
penalties, fines, charges, demands, liabilities, obligations and claims of any
kind (including interest, penalties and reasonable attorneys' and consultants'
fees, expenses and disbursements).
"MTVN Assigned Contracts" means, collectively, the Contracts
to be assigned to the Partnership by Imagine and VLLC, respectively, pursuant to
the Imagine Contribution Agreement and the VLLC Contribution Agreement.
"MTVN Benefit Plan" means (i) any "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (ii) any other employee benefit plan,
arrangement or policy, including without limitation, any stock option, stock
purchase, stock award, stock appreciation, phantom stock, deferred compensation,
pension, retirement, savings, profit sharing, incentive, bonus, health, life
insurance, cafeteria, flexible spending, dependent care, fringe benefit,
vacation pay, holiday pay, disability, sick pay, workers compensation,
unemployment, severance, employee loan or educational assistance plan,
arrangement or policy, and (iii) any employment, indemnification,
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consulting, severance or change-in-control agreement, in each case, which is
sponsored or maintained by any of the MTVN Entities or any of their Affiliates,
or to which any of the MTVN Entities or any of their Affiliates contributes or
is required to contribute, on behalf of current or former employees, consultants
or directors of the MTVN Entities or their beneficiaries or dependents, whether
or not written and whether or not created or maintained within or without the
United States.
"MTVN Contribution" means, collectively, the Imagine Assets
and the VLLC Assets.
"MTVN Entities" means, collectively, MTVN, MTVN Online,
Imagine and VLLC.
"MTVN Online Assets" means the MTVN Online Assets as defined
in the MTVN Online Contribution Agreement.
"MTVN Online Contribution Agreement" means the MTVN Online
Contribution, Assignment and Assumption Agreement dated as of the date hereof
between MTVN Online and VLLC.
"MTVN Online Liabilities" means the MTVN Online Liabilities as
defined in the MTVN Online Contribution Agreement.
"MTVN-VLLC Assets" means the MTVN-VLLC Assets as defined in
the MTVN-VLLC Contribution Agreement.
"MTVN-VLLC Contribution Agreement" means the MTVN-VLLC
Contribution, Assignment and Assumption Agreement dated as of the date hereof
between MTVN and VLLC.
"MTVN-VLLC Liabilities" means the MTVN-VLLC Liabilities as
defined in the MTVN-VLLC Contribution Agreement.
"Material Adverse Change Exclusions" means, with respect to
the Tune Entities (A) any loss of subscribers or advertising, provided that TCI
Music and the other Tune Entities have acted in good faith, (B) changes that
occur as a result of the transactions contemplated by the MOU and the
transactions contemplated hereby (including, without limitation, terminations of
affiliation or other agreements as a result of change in control or no
assignment provisions), (C) failure to launch the Box Service in additional
systems as a result of MTVN's failure to consent to the payment of launch fees,
(D) changes that occur as a result of the failure of Box or SonicNet to take any
action which requires MTVN's consent pursuant to the MOU where such consent is
not granted, and (E) changes, if any, disclosed to MTVN prior to May 19, 1999 in
an e-mail sent by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ or in a teleconference with ▇▇▇▇ ▇▇▇▇▇▇▇
initiated by Tune and Liberty with MTVN, in each case on May 18, 1999 for such
purpose.
"MOU" means the Letter Agreement dated May 19, 1999 among
Viacom, Liberty and TCI Music.
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"No Basket Representations" means, with respect to the MTVN
Entities, the representations and warranties contained in Sections 4.7, 4.11(a),
4.11(b), 4.11(c) and 4.11(e) with respect to the Tune Entities, the
representations and warranties contained in Sections 6.8, 6.10(g), 6.12(a),
6.12(b), 6.14, 6.20 and 6.21.
"Outstanding License" means, with respect to any Person, any
material License by or to such Person or to which such Person is otherwise a
party, or by which such Person or any of its Intellectual Property is subject or
bound.
"Parent Agreement" means the Parent Agreement and Guaranty
dated as of the date hereof among TCI Music, MTVN, Box, SonicNet, Liberty and
the Partnership.
"Partner" has the meaning set forth in the Partnership
Agreement.
"Partnership Interest" has the meaning set forth in the
Partnership Agreement.
"Permits" means permits, approvals, orders, consents,
licenses, certificates, franchises and exemptions from, and filings and
registrations with, Governmental Entities.
"Person" has the meaning set forth in the Partnership
Agreement.
"Pre-Closing Capital Contribution" means with respect to each
of MTVN and its Affiliates and TCI Music and its Affiliates, amounts provided by
MTVN and TCI Music (and their respective Affiliates), respectively, from May 19,
1999 to the date hereof in accordance with the MOU, to fund its respective
assets and businesses to be contributed to the Partnership with sufficient
capital to fund operations.
"Programming License Agreement" has the meaning set forth in
the Partnership Agreement.
"Promotion Agreement" has the meaning set forth in the
Partnership Agreement.
"Related Party Agreements" has the meaning set forth in the
Partnership Agreement.
"Services Agreement" has the meaning set forth in the
Partnership Agreement.
"SonicNet Contribution Agreement" means the SonicNet
Contribution, Assignment and Assumption Agreement dated as of the date hereof
between SonicNet and the Partnership.
"SonicNet LLC Assets" means the SonicNet LLC Assets as defined
in the SonicNet-LLC Contribution Agreement.
"SonicNet LLC Liabilities" means the SonicNet LLC Liabilities
as defined in the SonicNet-LLC Contribution Agreement.
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"SonicNet-LLC Contribution Agreement" means the SonicNet-LLC
Contribution, Assignment and Assumption Agreement dated as of the date hereof
between SonicNet and SonicNet LLC.
"Station" means the low power broadcast television stations
listed on Schedule 2.6 hereof.
"subsidiary" means, with respect to any Person, (i) any
corporation, association, limited liability company or other business entity of
which more than 50% of the total voting power of securities thereof with the
rights to vote to elect a majority of the directors, managers, trustees or
similar officials is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other subsidiaries of that Person or a
combination thereof and (ii) any partnership in which such Person or any of its
subsidiaries is a general partner and owns 10% or more of the equity interests
therein.
"Taxes" means any and all federal, state, local and foreign
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
whatsoever imposed by a Governmental Entity, including, without limitation,
income, payroll, withholding, excise, sales, use, lease, privilege, personal and
other property, use and occupancy, business and occupation, mercantile, real
estate, gross receipts, license, employment, severance, stamp, premium, windfall
profits, social security (or similar unemployment), disability, transfer,
registration, value added, alternative or add-on minimum, estimated, or capital
stock and franchise and other tax of any kind whatsoever, including any
interest, penalty or addition thereto, or additional amounts imposed with
respect thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Technology Sharing and License Agreement" has the meaning set
forth in the Partnership Agreement.
"Trademark License Agreement" means the Trademark License
Agreement dated as of the date hereof between MTVN and VLLC.
"Tune Assigned Contracts" means, collectively, the Contracts
to be assigned by SonicNet and Box to SonicNet LLC and Box LLC, respectively,
pursuant to the SonicNet-LLC Contribution Agreement and the Box-LLC Contribution
Agreement, respectively, and the Contracts to which any Tune Subsidiary is a
party.
"Tune Benefit Plan" means (i) any "employee benefit plan"
within the meaning of Section 3(3) of the ERISA, (ii) any other employee benefit
plan, arrangement or policy, including without limitation, any stock option,
stock purchase, stock award, stock appreciation, phantom stock, deferred
compensation, pension, retirement, savings, profit sharing, incentive, bonus,
health, life insurance, cafeteria, flexible spending, dependent care, fringe
benefit, vacation pay, holiday pay, disability, sick pay, workers compensation,
unemployment, severance, employee
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loan or educational assistance plan, arrangement or policy, and (iii) any
employment, indemnification, consulting, severance or change-in-control
agreement, in each case, which is sponsored or maintained by any of the Tune
Entities or any of their Affiliates, or to which any of the Tune Entities or any
of their Affiliates contributes or is required to contribute, on behalf of
current or former employees, consultants or directors of any of the Tune
Entities or their beneficiaries or dependents, whether or not written and
whether or not created or maintained within or without the United States.
"Tune Contribution" means the SonicNet LLC Assets, the Box LLC
Assets, the SonicNet Membership Interests, the Box Membership Interests and the
business and assets of the Tune Subsidiaries.
"Tune Entities" means, collectively, TCI Music, SonicNet, Box,
VJN LPTV, SonicNet LLC, Box LLC and the Tune Subsidiaries.
"Tune Subsidiary" or "Tune Subsidiaries" means one or more
subsidiaries of SonicNet and Box (other than the Excluded Subsidiaries)
immediately prior to the Closing (including Box LLC and SonicNet LLC), all of
the capital stock or other equity interest of which (other than Box LLC and
SonicNet LLC) shall be contributed to SonicNet LLC or Box LLC, as the case may
be, pursuant to the SonicNet-LLC Contribution Agreement or the Box-LLC
Contribution Agreement, respectively.
"Viacom" has the meaning set forth in the Partnership
Agreement.
"Viacom Inc." has the meaning set forth in the Partnership
Agreement.
"VLLC Assets" means the VLLC Assets as defined in the VLLC
Contribution Agreement.
"VLLC Contribution Agreement" means the VLLC Contribution,
Assignment and Assumption Agreement dated as of the date hereof between VLLC and
the Partnership.
"VLLC Liabilities" means the VLLC Liabilities as defined in
the VLLC Contribution Agreement.
1.2. Additional Definitions.
The following additional terms have the meaning ascribed
thereto in the Section or Schedule indicated below next to such term:
Defined Term Section Defined In
------------ ------------------
"Assigned MTVN Employment Contract" 4.13(e)
"Assigned Tune Employment Contract" 6.18(e)
"AT&T" Definition of AT&T/Liberty Agreement
"AT&T Systems" Definition of AT&T/Liberty Agreement
"Access Provisions" Definition of AT&T/Liberty Agreement
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Defined Term Section Defined In
------------ ------------------
"Box" Preamble
"Box Employment Contracts" 3.1(d)
"Box Europe" Definition of Excluded Tune Assets
"Box Excluded Agreements" Definition of Excluded Tune Assets
"Box Holland" Definition of Excluded Tune Assets
"Box Holland Joint Venture Agreement" Definition of Excluded Tune Assets
"Box Italy" Definition of Excluded Tune Assets
"Box LLC" Recitals
"Box Membership Interests" Recitals
"Box-MTVN Employees" 3.1(b)
"Business" Recitals
"Closing" 2.1
"COBRA" 3.1(o)
"Code" 4.13(b)
"Domain Name" 2.5
"EMAP" Definition of Excluded Tune Assets
"EMAP Excluded Agreements" Definition of Excluded Tune Assets
"ERISA" Definition of MTVN Benefit Plan
"Excluded Subsidiaries" Definition of Excluded Tune Assets
"FCC" 6.13(c)
"FCC Licenses" 6.13(c)
"Hazardous Substances" 6.11
"IP Rights Agreement" Definition of Excluded Tune Assets
"Imagine" Preamble
"Indemnified Party" 7.8
"Interactive Music Channel" 3.3
"Liberty" Preamble
"LMA Ruling" 2.6
"MTVN" Preamble
"MTVN Contribution IP" 4.15(a)
"MTVN Financial Statements" 4.4
"MTVN Indemnified Parties" 7.3
"MTVN Online" Recitals
"MTVN Online Interim Balance Sheet" 4.4
"MTVN-Partnership Employees" 3.1(j)
"MTVN Permits" 4.10(b)
"Operative Agreements" 2.1
"Other Party" 7.8(b)
"PBGC" 4.13(b)
"Partnership" Recitals
"Partnership Agreement" Recitals
"Partnership Indemnified Parties" 7.2
"Real Property" 6.10(b)
"Rebates" 3.2
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Defined Term Section Defined In
------------ ------------------
"Restrictive Provisions" 6.19
"SSI" 2.4
"Share Purchase Agreement" Definition of Excluded Tune Assets
"SonicNet" Preamble
"SonicNet LLC" Recitals
"SonicNet-LLC Employees" 3.1(a)
"SonicNet Membership Interests" Recitals
"SonicNet Trademarks" 3.4(b)
"TCI Music" Preamble
"Telstra" Definition of Excluded Tune Assets
"Telstra Agreement" Definition of Excluded Tune Assets
"Telstra SonicNet Sites" 3.4(a)
"Tipping Amount" 7.6
"Tune Budget" 6.7
"Tune Financial Statements" 6.5
"Tune Indemnified Parties" 7.2
"Tune Interim Balance Sheet" 6.5
"Tune Permits" 6.13(b)
"Tune Scheduled Intellectual Property" 6.15(b)
"Tune Subsidiary Benefit Plan" 6.18(f)
"VJN" Definition of Excluded Tune Assets
"VJN LPTV" Preamble
"Viacom" Preamble
"VLLC" Preamble
"Year 2000 Compliant" 6.22
ARTICLE 2
CLOSING
2.1. Execution and Delivery of Operative Agreements. Upon the
execution and delivery of this Agreement (the "Closing"), each of the parties
hereto shall contemporaneously execute and deliver the following applicable
agreements to which it is indicated to be a party (the "Operative Agreements"):
(a) the Partnership Agreement, in the form of Exhibit A
attached hereto;
(b) the Box-MTVN Assignment Agreement, in the form of Exhibit
B attached hereto;
(c) the Box-LLC Contribution Agreement, in the form of Exhibit
C attached hereto;
(d) the SonicNet-LLC Contribution Agreement, in the form of
Exhibit D attached hereto;
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(e) the MTVN-VLLC Contribution Agreement, in the form of
Exhibit E attached hereto;
(f) the Box Contribution Agreement, in the form of Exhibit F
attached hereto;
(g) the SonicNet Contribution Agreement, in the form of
Exhibit G attached hereto;
(h) the VLLC Contribution Agreement, in the form of Exhibit H
attached hereto;
(i) the Imagine Contribution Agreement, in the form of Exhibit
I attached hereto;
(j) the MTVN Online Contribution Agreement, in the form of
Exhibit J attached hereto;
(k) the Parent Agreement, in the form of Exhibit K attached
hereto;
(l) the Trademark License Agreement, in the form of Exhibit L
attached hereto;
(m) the Promotion Agreement, in the form of Exhibit M attached
hereto;
(n) the Services Agreement, in the form of Exhibit N attached
hereto;
(o) the Programming License Agreement, in the form of Exhibit
O attached hereto;
(p) the Box Holland License Agreement, in the form of Exhibit
P attached hereto;
(q) the Box Holland Promissory Note, in the form of Exhibit Q
attached hereto;
(r) the Technology Sharing and License Agreement, in the form
of Exhibit R hereto;
(s) the LMA Agreement, in the form of Exhibit S attached
hereto and
(t) assignments of lease for each real property lease assigned
pursuant to any of the Contribution Agreements, in the form of Exhibit T
attached thereto.
2.2. Pre-Closing Capital Contributions and Closing
Contributions. Each of MTVN and TCI Music has preliminarily determined in
accordance with the provisions of the MOU the amount of its respective
Pre-Closing Capital Contributions. The estimated amount of MTVN's Pre-Closing
Capital Contributions is, $3,136,460 (of which $2,439,469 is attributable to
VLLC and $696,991 is attributable to Imagine). The estimated amount of TCI
Music's Pre-
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Closing Capital Contributions is $5,548,000 (of which $3,360,000 is attributable
to Box and $2,188,000 is attributable to SonicNet) all of which amounts are
subject to adjustment by agreement of TCI Music and MTVN within three Business
Days after receipt by MTVN or TCI Music of the other's calculation thereof with
reasonable back-up materials attached. MTVN shall make a Closing Capital
Contribution within three Business Days after MTVN receives such calculation of
TCI Music's Pre-Closing Capital Contribution, which Closing Capital Contribution
shall be calculated on the basis of the formula therefor set forth in the MOU
and shall be deemed to have been made on the Closing Date.
2.3. Delivery of Contributions and Partnership Interests.
(a) (i) Each of SonicNet and Box shall contribute and assign
to SonicNet LLC and Box LLC, respectively, pursuant to their respective
Contribution Agreements, the SonicNet LLC Assets and the Box LLC Assets and
SonicNet LLC and Box LLC shall accept the SonicNet LLC Assets and the Box LLC
Assets, respectively, and assume the SonicNet-LLC Liabilities and the Box-LLC
Liabilities, respectively, (ii) MTVN and MTVN Online shall contribute and assign
to VLLC, pursuant to their respective Contribution Agreements, the MTVN-VLLC
Assets and the MTVN Online Assets, and VLLC shall accept the MTVN-VLLC Assets
and the MTVN Online Assets and assume the MTVN-VLLC Liabilities and the MTVN
Online Liabilities, and (iii) Box shall assign to MTVN, pursuant to the Box-MTVN
Assignment Agreement, and MTVN shall assume, the Box Employment Contracts.
(b) At the Closing, (i) each of Box, SonicNet, Imagine and
VLLC shall contribute and assign to the Partnership, pursuant to their
respective Contribution Agreements, the Box Membership Interests, the SonicNet
Membership Interests, the Imagine Assets and the VLLC Assets, (ii) the
Partnership shall accept the SonicNet Membership Interests, the Box Membership
Interests and the VLLC Assets and the Imagine Assets and assume the Imagine
Liabilities and VLLC Liabilities, all as more particularly described in the
applicable Contribution Agreements; provided, however, that except as expressly
set forth herein, the Partnership shall not assume any liabilities hereunder
except those expressly assumed under the Contribution Agreements to which it is
a party, and (iii) the Partnership shall issue to SonicNet a 8.75% interest in
the Partnership as a Limited Partner, to Box a 1.25% interest in the Partnership
as a Limited Partner, to VLLC a 1% interest in the Partnership as the General
Partner and a 69% interest in the Partnership as a Limited Partner and to
Imagine a 20% interest in the Partnership as a Limited Partner.
2.4. Delivery of Satellite Services, Inc. Notice.
Contemporaneously with the Closing, Liberty and MTVN shall deliver, or cause to
be delivered, written notice to Satellite Services, Inc. ("SSI") notifying SSI
that the Closing has occurred thereby.
2.5 Transfer of Domain Names. At the Closing, with respect to
each of the domain names set forth on Schedule 2.5 hereto (each a "Domain
Name"), MTVN shall cause the Controlled Affiliate set forth on Schedule 2.5
opposite a Domain Name to transfer to the Partnership all of such Controlled
Affiliate's right, title and interest in, to and under such Domain Name.
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2.6. Transfer of VJN LPTV Assets.
(a) Upon receipt of approval by the FCC for the transfer of
the FCC licenses of VJN LPTV with respect to 75% of the Stations from VJN LPTV
to Box LLC, Box shall promptly cause VJN LPTV to be merged into Box or
liquidated and distributed to Box, and Box shall therefor promptly transfer to
Box LLC, for no consideration, the FCC licenses for such Stations and all assets
related thereto, and thereafter, from time to time, as approved by the FCC for
the transfer of the FCC licenses with respect to any other Stations is received,
Box shall promptly transfer to Box LLC the FCC licenses for such Stations and
all assets related to each such Station. All such transfers shall be made
pursuant to an instrument of conveyance in form and substance reasonably
satisfactory to Box LLC. Each such instrument of conveyance shall contain
representations and warranties and indemnities from the Tune Entities relating
to such FCC licenses and such assets to the same extent as the representations
and warranties and indemnities contained herein. During the period commencing on
the date of this Agreement and terminating as to each Station on the earlier of
(x) the transfer of the applicable FCC licenses and assets with respect to such
Station to Box LLC or (y) the termination of the LMA Agreement with respect to
such Station, Box LLC shall reimburse VJN LPTV or Box, as applicable, for its
reasonable expenses incurred in the ordinary course of business in operating
such Station.
(b) In the event the FCC has denied the applications for
transfer of any license(s) for any of the Stations to Box LLC, or in the event
an LMA Ruling, as defined in the LMA Agreement, as to any Station is received,
Box shall pay to Box LLC $25,000 for each Station which the FCC has denied the
license transfer application or required termination of the LMA Agreement with
respect to. Such payments shall be made by wire transfer of immediately
available funds.
2.7 Transfer of Equity Interests in Box Italy. Box shall use
its reasonable best efforts to obtain all required approvals to transfer, and to
transfer, as promptly as practicable after the Closing, a portion of the equity
interests in Box Italy to Box LLC and a portion of such interests to either the
Partnership or a subsidiary of Box LLC, in such proportions as the Partnership
shall determine, in each case for no consideration and pursuant to an instrument
of conveyance in form and substance reasonably satisfactory to Box LLC and Box,
containing representations, warranties and indemnities from the Tune Entities
relating to such equity interests and to the assets of Box Italy to the same
extent as the representations, warranties contained herein which relate to the
Tune Subsidiaries and their assets. Upon the transfer of such equity interests
in Box Italy to Box LLC and to the Partnership or a subsidiary of Box LLC, TCI
Music shall be deemed to have made a Required Capital Contribution to the
Partnership on behalf of SonicNet and Box in an amount equal to the amount
contributed by TCI Music or its subsidiaries to Box Italy to fund its assets and
businesses with sufficient capital to fund operations in accordance with the
Tune Budget from May 19, 1999 to the date of such transfer and MTVN shall within
five Business Days thereafter, make a Capital Contribution to the Partnership on
behalf of VLLC and Imagine, without the need for any notice or Capital Call, in
an amount equal to nine times the amount deemed to have been contributed by TCI
Music above, which Capital Contribution shall also be deemed to be a Required
Capital Contribution.
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2.8 No Transfers, Etc. Box shall not, and shall not permit any
of its subsidiaries to, transfer or grant any Liens on any of the stock or other
equity of Box Italy or any of the assets of Box Italy or VJN LPTV, except to the
extent provided for in the liquidation of VJN LPTV or merger of VJN LPTV and Box
referred to in Section 2.6. Box shall cause Box Italy and VJN LPTV to conduct
their operations in the ordinary course (including in accordance with the LMA in
the case of VJN LPTV and including the continuation of the funding of operations
of Box Italy in accordance with the MOU) and to not pay any dividends pending
the contribution of the equity interests in Box Italy and the assets of VJN LPTV
as described in Sections 2.6 and 2.7.
ARTICLE 3
COVENANTS
3.1. Employees.
(a) Schedule 3.1(a) attached hereto sets forth those employees
of SonicNet who will become employees of SonicNet LLC upon consummation of the
Closing (the "SonicNet LLC Employees"). The Partnership shall cause SonicNet LLC
to treat the SonicNet LLC Employees in a fair and equitable manner, consistent
with other employees of the Partnership (including any previously employed by
MTVN).
(b) Schedule 3.1(b) attached hereto sets forth those employees
of Box and its subsidiaries who will become employees of MTVN upon consummation
of the Closing (the "Box-MTVN Employees"). MTVN shall treat the Box-MTVN
Employees in a fair and equitable manner, consistent with other similarly
situated employees of MTVN.
(c) TCI Music, SonicNet and Box shall be responsible for any
liability or obligation arising under any Tune Benefit Plan or as a result of
the employment or termination of employment of employees or former employees of
Box, SonicNet, Box LLC, SonicNet LLC, Box Italy or the Tune Subsidiaries, or the
provision of services or termination of provision of services by directors,
consultants, agents or independent contractors of Box, SonicNet, Box LLC,
SonicNet LLC, Box Italy or the Tune Subsidiaries (including, without limitation,
salaries, bonuses, payroll taxes, severance obligations, contributions to and
benefits under the Tune Benefit Plans and all other employment or service
related claims); provided, however, that none of TCI Music, Liberty, SonicNet or
Box shall assume or otherwise be responsible for (i) any liability or obligation
arising after the date hereof under the Assigned Tune Employment Contracts; (ii)
any liability or obligation arising after the date hereof under any Tune
Subsidiary Benefit Plan with respect to any SonicNet LLC Employee or Box-MTVN
Employee; or (iii) any liability or obligation with respect to the employment or
termination of employment of any SonicNet LLC Employee or Box-MTVN Employee
arising after the date hereof.
(d) With respect to the Box-MTVN Employees, MTVN shall assume
the obligations arising after the date hereof under the employment contracts
listed on Schedule 3.1(d) (the "Box Employment Contracts").
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(e) Neither the Partnership nor any of its subsidiaries nor
MTVN shall assume any liability or obligation under any employee benefit plan,
policy or arrangement or any employment agreement of TCI Music, Liberty, Box,
SonicNet or any of their Affiliates, except for (i) liabilities or obligations
arising after the date hereof under the Assigned Tune Employment Contracts or
(ii) with respect to any SonicNet LLC Employee or Box-MTVN Employee, liabilities
or obligations arising after the date hereof under any Tune Subsidiary Benefit
Plan.
(f) Box-MTVN and SonicNet LLC Employees shall be permitted to
elect to roll over, in cash and notes representing participant loans, any
distribution received from a tax-qualified 401(k) savings plan maintained by a
Tune Entity to a tax-qualified 401(k) savings plan established or maintained by
any MTVN Entity or the Partnership for the benefit of Box-MTVN or SonicNet LLC
Employees, as the case may be, to the extent permitted by the Code.
(g) With respect to any director, employee, consultant, agent
or independent contractor of any Tune Subsidiary or Box Italy who is not a
SonicNet LLC Employee or a Box-MTVN Employee, and whose employment or services
cannot be completely terminated prior to the consummation of the Closing due to
any applicable Laws, the Partnership or MTVN, as applicable, shall assist in the
termination of such director, employee, consultant, agent or independent
contractor, consistent with such Laws. TCI Music, SonicNet and Box shall be
responsible for all liabilities in connection with the employment or termination
of employment of any such employee or the provision of services or termination
of provision of services by any such director, consultant, agent or independent
contractor, including without limitation salaries, bonuses, payroll taxes,
severance obligations, contributions to and benefits under the Tune Benefit
Plans and all other employment or service related claims, with respect to all
periods whether before or after the Closing, as well as all reasonable legal
fees and expenses of MTVN or the Partnership and its Controlled Affiliates
arising from or incurred on account of any such termination.
(h) Until the second anniversary of the date hereof, neither
Liberty, TCI Music nor any of their Controlled Affiliates will hire any of the
Box-MTVN Employees or any of the employees of the Partnership or its
subsidiaries without the prior consent of MTVN.
(i) Neither Liberty, TCI Music nor any of their Controlled
Affiliates will solicit for employment any of the Box-MTVN Employees or any
employee of the Partnership or any of its subsidiaries for so long as TCI Music
or any of its Affiliates owns an equity interest in the Partnership. The
preceding sentence shall not apply with respect to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ to the
extent provided by the letter agreement dated May 19, 1999 among Liberty, TCI
Music and Viacom.
(j) Schedule 3.1(j) attached hereto sets forth a list of those
employees of any MTVN Entity who will become employees of the Partnership upon
the consummation of the Closing ("MTVN-Partnership Employees").
(k) Nothing in this Agreement shall limit the right of the
Partnership to hire additional employees after the Closing.
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(l) MTVN shall (i) permit each Box-MTVN Employee and his or
her dependents to participate in its employee benefit plans to the same extent
as MTVN's other similarly situated employees and their dependents; (ii) give
each Box-MTVN Employee credit for his or her past service with SonicNet or Box
(and any predecessor employer thereto) for purposes of eligibility to
participate and vesting (but not benefit accrual) under its employee benefit
plans; and (iii) not subject any Box-MTVN Employee to any limitations on
benefits for pre-existing conditions under its group health and disability
plans.
(m) The Partnership shall (i) permit each SonicNet LLC
Employee and his or her dependents to participate in its employee benefit plans
to the same extent as the Partnership's other similarly situated employees and
their dependents; (ii) give each SonicNet LLC Employee credit for his or her
past service with SonicNet or Box (and any predecessor employer thereto) for
purposes of eligibility to participate and vesting (but not benefit accrual)
under its employee benefit plans; and (iii) not subject any SonicNet LLC
Employee to any limitations on benefits for pre-existing conditions under its
group health and disability plans.
(n) TCI Music, SonicNet and Box shall be responsible for any
claims for group health benefits incurred prior to the Closing by SonicNet LLC
Employees or Box-MTVN Employees or their dependents; MTVN shall be responsible
for any claims for group health benefits incurred prior to the Closing by
MTVN-Partnership Employees or their dependents; the Partnership shall be
responsible for any claims for group health benefits incurred on or after the
Closing by SonicNet LLC Employees or MTVN-Partnership Employees or their
dependents; and MTVN shall be responsible for any claims for group health
benefits incurred on or after the Closing by Box-MTVN Employees or their
dependents. For purposes of this paragraph (n), a health care claim shall be
deemed to be incurred when the services giving rise to the claim are performed
and not when the employee is billed for such services or submits a claim for
benefits.
(o) TCI Music, SonicNet and Box shall be responsible for
providing any continuation of group health coverage to SonicNet LLC Employees or
Box-MTVN Employees or their dependents required by Section 4980B of the Code or
Sections 601-608 of ERISA ("COBRA") with respect to any "qualifying event," as
defined in Section 4980B of the Code, which occurs on or prior to the Closing
(including as a result of the transactions contemplated by this Agreement) and
MTVN shall be responsible for providing any continuation of group health
coverage to MTVN-Partnership Employees or their dependents required by COBRA
with respect to a qualifying event which occurs on or prior to the Closing
(including as a result of the transactions contemplated by this Agreement).
(p) TCI Music, SonicNet and Box shall be responsible for
providing any short-term disability benefits payable to any SonicNet LLC
Employee or Box-MTVN Employee with respect to any period prior to the Closing
and for providing any long-term disability benefits payable to any SonicNet LLC
Employee or Box-MTVN Employee who is on short-term disability as of the Closing;
MTVN shall be responsible for providing any short-term disability benefits
payable to any MTVN-Partnership Employee with respect to any period prior to the
Closing and for providing any long-term disability benefits payable to any
MTVN-Partnership Employee who is on a short-term disability as of the Closing;
the Partnership shall be responsible for providing any short-term disability
benefits payable to any SonicNet LLC Employee or
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MTVN-Partnership Employee with respect to any period after the Closing; and MTVN
shall be responsible for providing any short-term disability benefits payable to
any Box-MTVN Employee with respect to any period after the Closing.
(q) Sections 3.1 (l) through (p) shall not apply to employees
of Box Italy or the Tune Subsidiaries other than SonicNet LLC or Box LLC.
(r) In the event that the Partnership or any of its Affiliates
terminates any employee of The Box Argentina S.A., it shall do so in accordance
with any procedures required by local Laws.
3.2. Rebates of Launch Fees. TCI Music will use its
commercially reasonable efforts to obtain rebates of all launch fees paid to any
cable system to which it or its subsidiaries may be entitled under the
applicable affiliation agreements relating to Box or its subsidiaries
("Rebates") . TCI Music will promptly pay over to the Partnership any Rebates
that it or any of its subsidiaries receive as a result of such efforts or
otherwise.
3.3. Interactive Music Channel. In the event that Liberty
assigns its rights under the Access Provisions to TCI Music in connection with
certain recently-announced proposed transactions between Liberty and TCI Music,
then to the extent that AT&T provides or otherwise enables the functionalities
necessary to provide interactive television applications over the AT&T Systems,
and TCI Music decides to provide an interactive music and music related
transaction channel (an "Interactive Music Channel"), TCI Music agrees to offer
to the Partnership the opportunity to enter into a joint venture with TCI Music
to provide such channel, the terms and conditions of such joint venture to be
subject to the terms of the Access Provisions, as they may be amended, and upon
the formation of such joint venture, the Partnership agrees to offer (which
offer shall remain outstanding for 30 days) to license to such joint venture the
rights to the database being licensed pursuant to the Database License Agreement
on terms no less favorable than those of the Database License Agreement.
Formation of such a joint venture will also be subject to TCI Music and the
Partnership's formulation of a mutually acceptable business plan and to the
execution and delivery of reasonably acceptable definitive documentation
regarding the joint venture. In the event the Partnership and TCI Music do not
enter into such joint venture, neither such Person will have any further
obligation under this Section 3.3, but such failure shall not affect any of TCI
Music's obligations under Section 4.2 of the Parent Agreement. In the event that
Liberty does not assign its rights under the Access Provisions as they may be
amended to TCI Music, Liberty will not be obligated by the terms of this Section
3.3. This Section 3.3 is not intended to obviate any of the obligations of
Liberty, TCI Music or their Controlled Affiliates under the provisions of
Section 4.2 of the Parent Agreement.
3.4. The Telstra Agreement.
(a) During the term (including any renewal term) of the
Telstra Agreement and for six months after termination thereof, the Partnership
shall, and shall cause its Controlled Affiliates to (and, with respect to clause
(i) below, each of the Partners will, and will cause its Affiliates to):
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(i) comply with the provisions of Section 10
(Confidentiality) of the Telstra Agreement;
(ii) designate and maintain one or more SonicNet
Sites, as defined in the Telstra Agreement, including a World Wide Web site
branded "Addicted to Noise" (the "Telstra SonicNet Sites"), similar in nature to
the currently existing SonicNet Sites with links to the TMPL Site (as defined in
the Telstra Agreement) site and an exclusive feed with respect to the content
developed for the Telstra SonicNet Sites for the TMPL Site similar to the feed
currently provided by the SonicNet Sites;
(iii) grant to SonicNet for it to grant to TMPL (as
defined in the Telstra Agreement) the exclusive license in respect of such
Telstra SonicNet Sites and Software (as defined in the Telstra Agreement)
contemplated by Section 3.1 of the Telstra Agreement, and provide to SonicNet
such services, products, notices and other items that SonicNet may require in
order to comply with all of SonicNet's covenants and obligations set forth in
the Telstra Agreement, and otherwise cooperate with and assist SonicNet in
complying, in a timely manner, with its covenants and obligations under the
Telstra Agreement, including, without limitation, its obligations under Section
6 thereof; and
(iv) refrain from taking any action following the
Closing, and during the term or any renewal by TMPL of the Telstra Agreement,
that would result in or cause a breach by SonicNet of its warranties to TMPL
contained in Section 9.1 of the Telstra Agreement.
(b) SonicNet shall not renew the Telstra Agreement, shall not
transfer any Trademarks (as defined in the Telstra Agreement), which Trademarks
are set forth on Schedule 3.4(b) hereto ("SonicNet Trademarks"), to anyone
(other than TMPL or their successors or assigns, except as consideration or
partial consideration for an early termination of the Telstra Agreement) and
shall not create, incur, permit to exist or have outstanding any Lien on any of
the SonicNet Trademarks. In the event that the Telstra Agreement is terminated
prior to its scheduled expiration, not renewed by Telstra, or if renewed by
Telstra then after the expiration of the renewal term, all of SonicNet's rights
in and to the SonicNet Trademarks in the Territory (as defined in the Telstra
Agreement) , whether registered or unregistered, including the good will
associated therewith, shall, within 10 days after the expiration of the last of
SonicNet's obligations under the Telstra Agreement (including the conclusion of
any period following such termination during which SonicNet's activities in the
Territory are restricted or limited by the Telstra Agreement, be conveyed to
SonicNet LLC, free and clear of all Liens, and SonicNet will make
representations and warranties to SonicNet LLC comparable to those set forth
herein regarding the SonicNet LLC Assets which constitute Intellectual Property,
pursuant to an instrument of conveyance in form and substance reasonably
satisfactory to SonicNet LLC and SonicNet, and thereafter shall be owned
exclusively by SonicNet LLC.
(c) Upon a breach of the Telstra Agreement by any party
thereto other than SonicNet (which breach gives SonicNet the right to terminate
the Telstra Agreement), SonicNet shall immediately, to the extent provided for
in the Telstra Agreement, terminate such Agreement.
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3.5. The EMAP Agreements. With respect to the IP Rights
Agreement and the Share Purchase Agreement (capitalized terms used in this
Section 3.5 and not otherwise defined in this Section 3.5 or in this Agreement
shall have the meanings assigned to such terms in the EMAP Agreements):
(a) The Partnership shall, and shall cause its Controlled
Affiliates (all at the sole expense of Box) to provide to Box such Business
Information related to Box and access to Books and Records and title deeds of
VJN Video Jukebox Network International Limited in the possession or under the
control of or available to the Partnership as Box may be obligated to provide to
Purchaser pursuant to Section 10 and 11 of the IP Rights Agreement.
(b) The Partnership shall, and shall cause the Partners and
their Affiliates (all at the sole expense of Box) to cooperate with Box as is
necessary to permit Box to comply with all of the covenants and obligations of
VJN pursuant to the IP Rights Agreement, with the same force and effect as if
made by the Partnership, the Partners or such Affiliate, except the covenant of
VJN in Section 6.4 of the IP Rights Agreement.
3.6. Box Holland.
(a) The Partnership shall, from time to time prior to the
first anniversary of the Closing, advance, pursuant to the Box Holland
Promissory Note attached as Exhibit Q hereto, to Box or its applicable
subsidiary such amounts as Box or such subsidiary may request to fund its share
of the Box Holland net cash requirements to the extent required to fund the
operating costs and capital expenditures of Box Holland in accordance with the
projected Business Plan for Box Holland (1998-2001) as previously furnished to
MTVN, but in no event more than $1.3 million in the aggregate; provided,
however, that prior to any such advance, Box certifies that the conditions to
such advance have been satisfied. If the interest in Box Holland of Box's
applicable subsidiary is sold or otherwise disposed of, Box will repay such
advances out of, but only to the extent of, the cash proceeds actually received
by it or its Affiliates from such sale, and otherwise shall have no obligation
or liability with respect to such advances. To the extent such cash proceeds are
sufficient therefor, the amount to be repaid will include simple interest of 6%
per annum.
(b) The Partnership shall, and shall cause its applicable
Controlled Affiliates to, license to Box pursuant to the Box Holland License
Agreement those Intellectual Property rights that they have which are necessary
for Box to comply with its existing licensing obligations to Box Holland as and
to the extent described in the Box Holland License Agreement.
3.7. Qualifications to Sections 3.4, 3.5 and 3.6.
(a) Notwithstanding the provisions of Section 3.4, 3.5 and
3.6, except as set forth in Section 3.6(a) above, the obligations with respect
to the arrangements contemplated in such Sections shall arise only if and to the
extent necessary to enable Box or SonicNet or their respective subsidiaries to
meet their obligations under, and so as not to breach or be in breach of,
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the Telstra Agreement, the EMAP Agreements or the applicable Box Excluded
Agreement, as the case may be.
(b) TCI Music will, and will cause Box and SonicNet to, use
commercially reasonable efforts to negotiate with the other parties to the
Telstra Agreement and the EMAP Agreements for appropriate amendments to or
terminations of such agreement that would limit or eliminate the obligations of
Box and SonicNet and their applicable subsidiaries thereunder, provided that
none of TCI Music, Box nor SonicNet shall be obligated to make any material
expenditure in order to accomplish the same.
3.8. Cooperation for Financial Reporting. The Tune Entities
shall cooperate with the Partnership, or any successor, and shall provide the
Partnership, or any successor, access to all relevant financial information, to
the extent reasonably appropriate for the Partnership to be able to prepare such
audited financial statements for prior periods for the business conducted by it,
as may be reasonably necessary or appropriate for the Partnership, or any
successor, to make a public offering of its securities and to comply with all
financial reporting requirements of applicable law. Box shall provide the
Partnership with copies of all of its historical audited financial statements
and shall cause its auditors to cooperate with the Partnership in connection
with any required reissuance of any opinion thereon or certification thereof.
The Partnership will reimburse the Tune Entities for all reasonable
out-of-pocket expenses incurred by them in connection with the performance of
their obligations under this Section 3.8.
3.9. MTVN Efforts. MTVN shall use its reasonable best efforts
(without any obligation to pay money in connection therewith) to cause SonicNet
LLC and Box LLC to perform their obligations under Sections 3.4, 3.5 and 3.6 of
this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE MTVN ENTITIES
Subject to Section 8.16, the MTVN Entities hereby jointly and
severally represent and warrant to Liberty, TCI Music and the Partnership as
follows:
4.1. Due Incorporation; Good Standing.
(a) Each of MTVN and Imagine is a corporation duly
incorporated, validly existing and in good standing as a corporation under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and its businesses as currently
conducted insofar as they relate to the MTVN Contribution.
(b) VLLC is a limited liability company duly formed, validly
existing and in good standing as a limited liability company under the laws of
the State of Delaware and has the requisite limited liability company power and
authority to own, lease and operate its assets and its businesses as currently
being conducted.
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4.2. Due Authority; Valid, Binding and Enforceable.
(a) Each of the MTVN Entities has the requisite corporate (or
in the case of VLLC, limited liability company) power and authority to enter
into and perform this Agreement and the Operative Agreements to which it is a
party; the execution, delivery and performance by each of the MTVN Entities of
this Agreement and of the Operative Agreements to which it is a party have been
duly authorized by all required corporate (or in the case of VLLC, limited
liability company), action on its part and, if required, by its stockholder (or
in the case of VLLC, its sole member), and this Agreement and the Operative
Agreements to which each of the MTVN Entities is a party have been duly executed
and delivered by it.
(b) This Agreement and the Operative Agreements to which each
of the MTVN Entities is a party are legal, valid and binding obligations of each
such MTVN Entity, enforceable against it in accordance with their respective
terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and (ii) to the extent that equitable remedies, such as injunctive
relief or specific performance, are within the discretion of courts of competent
jurisdiction.
4.3. No Violation of Laws or Agreements. The execution,
delivery, and performance by each of the MTVN Entities of this Agreement and the
Operative Agreements to which each is a party and the consummation by each of
the MTVN Entities of the transactions contemplated hereby and thereby do not and
will not (a) violate, conflict with or result in the breach of any provision of
the certificate of incorporation, by-laws, certificate of formation or operating
agreement (or similar organizational documents with different names) of the
applicable MTVN Entity, or (b) except as set forth on Schedule 4.3(b), violate,
conflict with, result in a breach of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or both, constitute a
default) under, require any consent under, or notice to, or filings with or
result in or permit the termination, amendment, modification, acceleration,
suspension, revocation or cancellation of, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the Imagine Assets,
the VLLC Assets or the Domain Names or give to others any interests or rights
therein under (i) any MTVN Permit, any MTVN Benefit Plan, any Outstanding
License of an MTVN Entity or any Contract to which any of the MTVN Entities is a
party, or by which any of the Imagine Assets, the VLLC Assets or the Domain
Names may be bound or affected, or (ii) any judgment, injunction, writ, award,
decree, restriction, ruling, or order of any court, arbitrator or other
Governmental Entity or any applicable constitution, or Law, to which any of the
MTVN Entities is subject or which is applicable to any of the Imagine Assets,
the VLLC Assets or the Domain Names, except in any case under this clause (b) as
would not, individually or in the aggregate, have a material adverse effect on
(y) the Imagine Assets, the VLLC Assets or the Domain Names, taken as a whole,
or (z) the ability of any of the MTVN Entities to perform their obligations
under this Agreement and the Operative Agreements to which they are a party.
4.4. Financial Statements. True, correct and complete copies
of (i) the unaudited balance sheet of Imagine as of December 31, 1998 and the
related statement of income for the twelve-month period then ended are attached
hereto as Part A of Schedule 4.4(a), (ii) the unaudited balance sheet of the
MTVN Online Business consisting of ▇▇▇.▇▇▇, ▇▇▇.▇▇▇ and
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Buggles, as of December 31, 1998 and the related statements of income for the
twelve-month period then ended are attached hereto as Part B of Schedule 4.4(a)
and (iii) the unaudited balance sheet of the MTVN Online Business consisting of
▇▇▇.▇▇▇, ▇▇▇.▇▇▇ and Buggles, as of March 31, 1999 and the related statements of
income for the three months then ended are attached hereto as Part C of Schedule
4.4(a) (the "MTVN Online Interim Balance Sheet") (all such financial statements
are referred to herein collectively as the "MTVN Financial Statements"). The
MTVN Financial Statements were prepared in accordance with the books and records
of Imagine and the MTVN Online Business, as applicable, and except as set forth
on Schedule 4.4(b) fairly present in all material respects the financial
condition and results of operations (MTVN Online Business only) of Imagine and
the MTVN Online Business as of the dates and for the periods indicated, in each
case in conformity with GAAP, consistently applied, throughout the periods
specified, except as expressly set forth therein and except that the MTVN
Financial Statements omit footnotes and the MTVN Online Interim Balance Sheet is
subject to normal year-end adjustments which are not, in the aggregate,
material.
4.5. Contracts. Schedule 4.5(a) sets forth a list of all
written, and a description of all oral, Contracts to which (x) Imagine is a
party (other than the Imagine Excluded Contracts, as defined in the Imagine
Contribution Agreement) or (y) VLLC is (or after the contribution to VLLC of the
VLLC Assets will be) a party (all of which Contracts will be contributed to the
Partnership pursuant to the Imagine Contribution Agreement or the VLLC
Contribution Agreement), except for any such Contract providing for payments to
or by Imagine or VLLC, as the case may be, over the remaining term of such
Contracts of no more than $5,000 individually or $50,000 in the aggregate for
all such non-scheduled Contracts. Except as disclosed on Schedule 4.5(b), after
giving effect to the contribution to VLLC of the VLLC Assets (i) all such
Contracts are valid and binding on, and enforceable against, Imagine or VLLC, as
the case may be, in accordance with their terms, except as such enforceability
may be limited by applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization or affecting creditors' rights generally and except
to the extent that injunctive or other equitable relief is within the discretion
of a court and each of such Contracts is, to the knowledge of Imagine or VLLC,
as the case may be, valid and binding on, and enforceable against the other
parties thereto, except as such enforceability may be limited by applicable laws
relating to bankruptcy, insolvency, fraudulent conveyance, reorganization or
affecting creditors' rights generally and except to the extent that injunctive
or other equitable relief is within the discretion of a court, (ii) none of
MTVN, Imagine, VLLC, or, to the knowledge of Imagine and VLLC, any other party
to any such Contract is in breach thereof or default thereunder, and (iii) there
does not exist under any provision of any such Contract, to the knowledge of
Imagine and VLLC, any event that, with the giving of notice or the lapse of time
or both, would constitute such a breach or default, except with respect to the
foregoing clauses (i)-(iii) for all such failures to be valid, binding and
enforceable and such breaches, defaults, events and disputes which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the Imagine Assets and the VLLC Assets, taken as a whole;
provided, however, that any qualification in this Section 4.5 as to knowledge
shall not apply to the extent any other party to a Contract is MTVN or a
Controlled Affiliate of MTVN.
4.6. No Changes. Except as set forth on Schedule 4.6, since
May 19, 1999, each of the MTVN Entities has conducted its respective business
(insofar as it relates to the
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MTVN Contribution) in a manner which it reasonably believed would further the
Business of the Partnership and which would not interfere with or frustrate the
transactions contemplated by this Agreement and otherwise only in the ordinary
course of business consistent with past practices, and since December 31, 1998,
there has not been: (i) any material adverse change in the businesses
constituting the MTVN Contribution, except for material adverse changes that may
have resulted from the public announcement of the execution of the MOU, or (ii)
any termination of any Contract to which any of Imagine, MTVN (insofar as it
relates to the MTVN Contribution) or VLLC is a party (other than Imagine
Excluded Contracts and Contracts which expire in accordance with their terms and
Contracts to which MTVN and its Controlled Affiliates are the only parties,
except for any such termination which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Imagine Assets and the VLLC Assets, taken as a whole.
4.7. No Brokerage. There is no investment banker, broker,
finder or other similar intermediary which has been retained by any MTVN Entity
or is authorized to act on behalf of any MTVN Entity or any Affiliates thereof
or any of their officers and directors who might be entitled to any fee or
commission from Liberty, any of the Tune Entities or any Affiliates thereof, the
Partnership or any of its subsidiaries upon consummation of the transactions
contemplated by this Agreement or the Operative Agreements.
4.8. Absence of Litigation. Except as set forth on Schedule
4.8, there is no action, suit, investigation, claim, arbitration or litigation
pending or, to the knowledge of any MTVN Entity, threatened against any MTVN
Entity or their business and operations insofar as it relates to the Imagine
Assets or the VLLC Assets, at law or in equity, before or by any arbitrator or
Governmental Entity, except for any such actions, suits, investigations, claims,
arbitrations or litigations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Imagine Assets
and the VLLC Assets, taken as a whole. No MTVN Entity is currently operating
under or subject to any order, award, judgment, writ, decree, determination or
injunction, in any such case specific to the use by any MTVN Entity of the
Imagine Assets or the VLLC Assets, of any arbitrator or Governmental Entity.
4.9. No Real Property; Totality and Condition of Assets.
(a) Neither Imagine (solely with respect to the Imagine
Assets) nor VLLC, after giving effect to the contribution to VLLC of the VLLC
Assets, owns, leases or has any interest in any real property which are
exclusive to its businesses.
(b) Each of Imagine and VLLC, after giving effect to the
contribution to VLLC of the VLLC Assets, is the sole owner of and has good title
to or a valid leasehold interest in the Imagine Assets and the VLLC Assets,
respectively, free and clear of any Liens, except for and subject only to Liens
listed in Schedule 4.9(b) and those which would not, individually or in the
aggregate be expected to have a material adverse effect on the Imagine Assets
and the VLCC Assets, taken as a whole. The Imagine Assets and the VLLC Assets
are in all material respects in good operating condition and repair in
accordance with normal and customary industry practices for items of comparable
age and use, reasonable wear and tear excepted.
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4.10. Compliance with Laws; Permits.
(a) Each of the MTVN Entities is in compliance, in all
material respects, with all Laws applicable to its use and operation of the
Imagine Assets, the VLLC Asset and the Domain Names.
(b) Each of the MTVN Entities has obtained and holds all
Permits (collectively, the "MTVN Permits") necessary in order to use and operate
the Imagine Assets, the VLLC Assets as currently used and operated, none of
which has been modified or rescinded and all of which were validly issued and
are in full force and effect. No event has occurred and is continuing that
permits, or after notice or lapse of time or both would permit, any modification
or termination of any MTVN Permit. Each of the MTVN Entities has all rights
necessary and the ability required, if any, to transfer the MTVN Permits as
contemplated by this Agreement and the Operative Agreements.
(c) The Domain Names are owned by the MTVN Entities or their
nominees free and clear of all liens.
4.11. Contribution of Assets; Operation of Business.
(a) The MTVN Contribution and the Domain Names consist of all
of the assets and businesses (other than the assets and businesses expressly
excluded therefrom under the Contribution Agreements) owned or controlled by the
MTVN Entities that constitute MTVN's current (or, as of May 19, 1999, planned)
assets and businesses engaged (or to be engaged) in each case exclusively in the
Business, including all assets and businesses used or to be used as of May 19,
1999, in each case, exclusively in connection with the ▇▇▇.▇▇▇, ▇▇▇.▇▇▇ and
Imagine Radio businesses and all directly or indirectly wholly-owned
international businesses engaged or to be engaged as of May 19, 1999, in each
case, exclusively in the Business.
(b) MTVN and Imagine have operated the MTVN Contribution since
May 19, 1999 in a manner which they reasonably believe will further the Business
of the Partnership and which will not interfere with or frustrate the
transactions contemplated hereby.
(c) Since May 19, 1999, MTVN has funded and has caused its
subsidiaries to fund the MTVN Contribution with sufficient capital to fund
operations. For purposes of this Section 4.11, such fundings include MTVN's
overhead charged and allocated in the same manner as it will be charged and
allocated to the Partnership after the Closing.
(d) Each of the Controlled Affiliates set forth on Schedule
2.5 has good title to the Domain Name set forth on Schedule 2.5 opposite such
Controlled Affiliate's name, free and clear of any Liens.
(e) The terms and conditions of each of the Trademark License
Agreement, the Programming License Agreement and the Technology Sharing and
License Agreement (each taken as a whole) are no less favorable to the
Partnership than the terms and conditions of similar
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types of such agreements between and among Viacom and its non wholly-owned
Controlled Affiliates.
4.12. Absence of Liabilities. There are no liabilities or
obligations relating to the MTVN Contribution or the Domain Names other than (i)
the VLLC Liabilities and the Imagine Liabilities being assumed by the
Partnership pursuant to the VLLC and Imagine Contribution Agreements (which,
with respect to periods prior to the Closing, are limited to certain accounts
payable, accrued expenses, prepayments and similar working capital items
reflected in the balance sheet attached as Exhibit A to Schedule 4.12 or of the
same types as such items reflected on such balance sheet which were incurred
since the date thereof in the ordinary course of business and consistent with
past practice and are not in excess of historical amounts for comparable periods
(provided, however, that such liabilities and obligations shall not include
liabilities or obligations relating to any MTVN Benefit Plan) and which, with
respect to periods after the Closing, are limited to liabilities or obligations
arising after, and with respect to the period following, the Closing under the
MTVN Assigned Contracts, other than liabilities under such MTVN Assigned
Contracts which are not being assumed by the Partnership) and (ii) certain
liabilities of VLLC under the Technology License Agreement, the Trademark
License Agreement, the Programming License Agreement and the Promotion
Agreement, which liabilities are not included in the VLLC Liabilities and are
not being assumed by the Partnership.
4.13. Employee Benefits.
(a) Set forth on Schedule 4.13(a) hereto is a complete and
correct list of any MTVN Benefit Plan which covers any MTVN-Partnership
Employee. None of the MTVN Entities nor any of their Affiliates has communicated
to present or former employees of any MTVN Entity or adopted or authorized any
additional material MTVN Benefit Plan or any material change in or termination
of any existing MTVN Benefit Plan.
(b) With respect to any "defined benefit plan", within the
meaning of Section 3(35) of ERISA, maintained or contributed to by any MTVN
Entity or any of their ERISA Affiliates within the last six years: (i) no
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been incurred
(other than for premiums not yet due); (ii) no notice of intent to terminate any
such plan has been filed with the PBGC or distributed to participants and no
amendment terminating any such plan has been adopted which could result in any
liability to the MTVN Entities, the Partnership or the Tune Entities; (iii) no
proceedings to terminate any such plan have been instituted by the PBGC and no
event or condition has occurred which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any such plan; (iv) no "accumulated funding deficiency," within the
meaning of Section 302 of ERISA or Section 412 of the Internal Revenue Code of
1986, as amended (the "Code"), whether or not waived, has been incurred; and (v)
no Lien has arisen under ERISA or the Code, or is likely to arise, on the assets
of any MTVN Entity.
(c) No MTVN Entity has incurred any liability with respect to
any "multiemployer plan," within the meaning of Section 3(37) of ERISA to which
any MTVN Entity or any of their ERISA Affiliates has contributed or been
required to contribute, other than for contributions not yet due.
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(d) No MTVN Entity has any liability, contingent or otherwise,
under Section 4069 or 4212 of ERISA.
(e) With respect to any employment contract which will be
contributed to the Partnership pursuant to the VLLC Contribution Agreement (an
"Assigned MTVN Employment Contract"):
(i) None of the MTVN Entities, nor, to the knowledge
of any of the MTVN Entities, any other party to any Assigned MTVN Employment
Contract is in breach thereof or default thereunder (or would, with the giving
of notice or lapse of time or both, be in breach or default);
(ii) There does not exist under any provision of any
such Assigned MTVN Employment Contract, to the knowledge of the MTVN Entities,
any event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default;
(iii) Neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement, will (A)
increase the amount of any payments or benefits otherwise payable under any
Assigned MTVN Employment Contract, (B) result in the acceleration of the time of
payment, exercisability, funding or vesting of any such payments or benefits, or
(C) result in any payment (whether severance pay or otherwise) becoming due
under any Assigned MTVN Employment Contract; and
(iv) No payment or series of payments that would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code) has been made or will be made under any Assigned MTVN Employment Contract
in connection with the execution of this Agreement or as a result of the
consummation of the transactions contemplated hereby.
4.14. Employees. Except as set forth on Schedule 4.14 attached
hereto, no employees of any MTVN Entity are represented by a labor union or
other labor organization.
4.15. Intellectual Property.
(a) MTVN has sufficient title and ownership of, and rights to
use, the Intellectual Property included in the MTVN Contribution (other than any
right, title or interest of VLLC under the Trademark License Agreement, the
Partnership Agreement, the Technology Sharing and License Agreement and the
Programming License Agreement) (the "MTVN Contribution IP") in order to
contribute the same as contemplated under this Agreement without any conflict
with or infringement of the rights of others, and such rights will not be
adversely affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Schedule 4.15(b) contains a true, accurate and complete
list as of the date hereof of all Intellectual Property (if any) that
constitutes patents, patent applications, trademark and service marks and
corresponding registrations and applications for registration thereof, and
registered copyrights and corresponding registrations and applications for
registration thereof, as well as Domain Names, included in the MTVN Contribution
IP.
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(c) Schedule 4.15(c) further sets forth a true, accurate and
complete list as of the date hereof of all Outstanding Licenses of MTVN or its
Affiliates included in the MTVN Contribution IP.
(d) Except as set forth in Schedule 4.15(c), the MTVN Entities
have sole and exclusive beneficial and record ownership, legal title and the
right to use the MTVN Contributed IP, free and clear of Liens and any rights or
claims of present or former employees, consultants, officers and directors of
the any of the MTVN Entities.
(e) The MTVN Entities have not, in connection with the MTVN
Contribution, interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property of third parties, and are not
presently so interfering, infringing, misappropriating or in conflict therewith,
nor have any of them received any communications alleging that it has infringed
or violated any of the Intellectual Property of any other Person, and (without
limiting any of the other representations and warranties herein), to the
knowledge of the MTVN Entities and any of their respective officers, there is
not any basis for the making of any such allegation.
(f) There is not pending, nor to the MTVN Entities' knowledge,
has there been threatened, any action or proceeding to contest, oppose, cancel
or otherwise challenge the validity, ownership or enforceability of any of the
MTVN Contribution IP.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LIBERTY
Liberty hereby represents and warrants to the MTVN Entities
and the Partnership, as follows:
5.1. Due Incorporation; Good Standing. Liberty is a
corporation duly incorporated, validly existing and in good standing as a
corporation under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its assets and
businesses as currently being conducted, except in any such case as would not
have a material adverse effect on its ability to perform its obligations
hereunder and in the Parent Agreement.
5.2. Due Authority; Valid, Binding and Enforceable.
(a) Liberty has the requisite corporate power and authority to
enter into and perform this Agreement and the Parent Agreement; the execution,
delivery and performance by it of this Agreement and of the Parent Agreement
have been duly authorized by all required corporate action on its part and, if
required, by its stockholders, and this Agreement and the Parent Agreement have
been duly executed and delivered by it.
(b) This Agreement and the Parent Agreement are legal, valid
and binding obligations of Liberty, enforceable against it in accordance with
their respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency or other similar laws
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affecting the enforcement of creditors' rights generally and (ii) to the extent
that equitable remedies, such as injunctive relief or specific performance, are
within the discretion of courts of competent jurisdiction.
5.3. No Violation of Laws or Agreements. The execution,
delivery, and performance by Liberty of this Agreement and the Parent Agreements
and the consummation by it of the transactions contemplated hereby and thereby
with respect to Liberty do not and will not, (a) violate, conflict with or
result in the breach of any provision of its certificate of incorporation, or
by-laws, or (b) violate, conflict with, result in a breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, require any consent under, or
notice to, or filings with or result in or permit the termination, amendment,
modification, acceleration, suspension, revocation or cancellation of, or result
in the creation or imposition of any Lien of any nature whatsoever upon any of
the SonicNet LLC Assets, the Box LLC Assets, the SonicNet Membership Interests,
the Box Membership Interests or the assets of the Tune Subsidiaries or give to
others any interests or rights therein under (i) any license, plan, Permit or
Contract to which it is a party or (ii) any judgment, injunction, writ, award,
decree, restriction, ruling, or order of any court, arbitrator or Governmental
Entity or any applicable constitution, or Law, to which it is subject with such
exceptions as, individually and in the aggregate, would not have a material
adverse effect on its ability to perform its obligations under this Agreement
and the Parent Agreement.
5.4. No Solicitation. Since May 19, 1999, Liberty has not
hired any Person that is an employee of SonicNet or Box or the Tune
Subsidiaries. Since May 19, 1999, Liberty has not hired any Person who would
otherwise become an employee of the Partnership or any of its subsidiaries.
5.5. AT&T/Liberty Agreement. The copy of the AT&T/Liberty
Agreement attached hereto as Schedule 5.5 is a true and correct copy of such
Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES BY TCI MUSIC,
SONICNET AND BOX
Subject to Section 8.16, TCI Music, SonicNet and Box hereby
jointly and severally represent and warrant to the MTVN Entities and the
Partnership, as follows:
6.1. Due Incorporation; Good Standing.
(a) Each of TCI Music, SonicNet, Box, the other Tune Entities
and the Tune Subsidiaries is a corporation (or other entity) duly incorporated
(or organized), validly existing and in good standing as a corporation (or such
other entity) under the laws of the state of its incorporation or formation and
each of SonicNet, Box, the other Tune Entities and the Tune Subsidiaries has
previously delivered to MTVN complete and correct copies of its certificate of
incorporation and all amendments thereto to the date hereof and its by-laws, as
currently in effect (or similar organizational documents with different names).
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(b) Each of SonicNet LLC and Box LLC is a limited liability
company duly formed, validly existing and in good standing as a limited
liability company under the laws of the State of Delaware, has the requisite
limited liability company power and authority to own, lease and operate its
assets and its businesses as currently being conducted and has previously
delivered to MTVN complete and correct copies of its certificate of formation
and all amendments thereto to the date hereof and its operating agreement, as
currently in effect.
6.2. Due Authority; Valid, Binding and Enforceable.
(a) Each of the Tune Entities has the requisite corporate (or
in the case of SonicNet LLC and Box LLC, limited liability company) power and
authority to enter into and perform this Agreement and the Operative Agreements
to which it is a party; the execution, delivery and performance by each of the
Tune Entities of this Agreement and of the Operative Agreements to which it is a
party have been duly authorized by all required corporate (or in the case of
SonicNet LLC and Box LLC, limited liability company) action on its part and by
its stockholders (or in the case of each of SonicNet LLC and Box LLC, its sole
member), and this Agreement and the Operative Agreements to which each of the
Tune Entities is a party have been duly executed and delivered by it.
(b) This Agreement and the Operative Agreements to which each
of the Tune Entities is a party are legal, valid and binding obligations of such
Tune Entity, enforceable against it in accordance with their respective terms,
except (i) as such enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) to the extent that equitable remedies, such as injunctive relief or
specific performance, are within the discretion of courts of competent
jurisdiction.
6.3. No Violation of Laws or Agreements. The execution,
delivery, and performance by each of the Tune Entities of this Agreement and the
Operative Agreements to which each is a party and the consummation by each of
the Tune Entities of the transactions contemplated hereby and thereby do not and
will not (a) violate, conflict with or result in the breach of any provision of
the certificate of incorporation, by-laws, certificate of formation or operating
agreement (or similar organizational documents with different names) of the
applicable Tune Entity or (b) except as set forth on Schedule 6.3(b), violate,
conflict with, result in a breach of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or both, constitute a
default) under, require any consent under, or notice to, or filings with or
result in or permit the termination, amendment, modification, acceleration,
suspension, revocation or cancellation of, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the SonicNet LLC
Assets, the Box LLC Assets, the SonicNet Membership Interests, the Box
Membership Interests, SonicNet LLC, Box LLC or any assets of any Tune Subsidiary
or give to others any interests or rights therein under (i) any Tune Permit, any
Tune Benefit Plan, any Outstanding License of a Tune Entity or any Contract to
which any of the Tune Entities is a party, or by which any of the SonicNet LLC
Assets, the Box LLC Assets, the SonicNet Membership Interests, the Box
Membership Interests, SonicNet LLC, Box LLC or any assets of any Tune Subsidiary
may be bound or affected or (ii) any judgment, injunction, writ, award, decree,
restriction, ruling, or order of any court, arbitrator or other Governmental
Entity or any applicable constitution, or Law, to which any of the Tune Entities
is subject or
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which is applicable to any of the SonicNet LLC Assets, the Box LLC Assets, the
SonicNet Membership Interests, the Box Membership Interests, SonicNet LLC, Box
LLC or any assets of any Tune Subsidiary, except in any case under this clause
(b) as would not, individually or in the aggregate, have a material adverse
effect on (y) the SonicNet LLC Assets, the Box LLC Assets and the assets of the
Tune Subsidiaries, taken as a whole, or SonicNet LLC and Box LLC, taken as a
whole, or (z) the ability of the Tune Entities to perform their obligations
under this Agreement and the Operative Agreements to which they are a party.
6.4. Subsidiaries. Except for the Excluded Subsidiaries set
forth on Schedule 6.4(a), the only subsidiaries of SonicNet LLC, Box LLC,
SonicNet or Box, as the case may be, are the entities set forth on Schedule
6.4(b). Set forth next to the name of each such Tune Subsidiary identified on
Schedule 6.4(b) is the jurisdiction of incorporation (or other formation) for
such Tune Subsidiary. Except as set forth on Schedule 6.4(b), SonicNet and/or
Box directly or indirectly beneficially own 100% of the outstanding shares of
capital stock or other equity interests of each Tune Subsidiary, free and clear
of all Liens, and all of such shares of capital stock or other equity interests
are duly authorized and validly issued, fully paid and nonassessable and were
not issued in violation of, or subject to, any preemptive or similar rights.
There are no outstanding (x) securities convertible into or exchangeable for any
capital stock of any of the Tune Subsidiaries, (y) options, warrants or other
rights to purchase or subscribe for the capital stock of any of the Tune
Subsidiaries or securities convertible into or exchangeable for the capital
stock of any of the Tune Subsidiaries or (z) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind relating to the
issuance of any capital stock of any of the Tune Subsidiaries, any such
convertible or exchangeable securities or any such options, warrants or rights.
Except as set forth in Schedule 6.4(c), neither SonicNet nor Box directly or
indirectly owns any capital stock or other equity interest in any Person other
than the Tune Subsidiaries (excluding the Excluded Subsidiaries).
6.5. Financial Statements. True, correct and complete copies
of the unaudited balance sheet of each of SonicNet and its Tune Subsidiaries and
Box and its Tune Subsidiaries as of December 31, 1998 and the related statements
of income for the twelve-month period then ended are attached hereto as Part A
of Schedule 6.5, and true, correct and complete copies of the unaudited balance
sheet of each of SonicNet and its Tune Subsidiaries and Box and its Tune
Subsidiaries (the "Tune Interim Balance Sheet") at June 30, 1999 and the related
statements of income for the six months then ended are attached hereto as Part B
of Schedule 6.5 (all such financial statements are referred to herein
collectively as the "Tune Financial Statements"). The Tune Financial Statements
were prepared in accordance with the books and records of each of the applicable
Tune Entities and fairly present in all material respects the financial
condition and results of operations of SonicNet and its Tune Subsidiaries and
Box and its Tune Subsidiaries as of the dates and for the periods indicated, in
each case in conformity with GAAP, consistently applied, throughout the periods
specified, except as expressly set forth therein and except that the Tune
Financial Statements may omit footnotes and the Tune Interim Balance Sheet is
subject to normal year-end adjustments which are not, in the aggregate,
material.
6.6. Contracts. Schedule 6.6 sets forth a list of all written,
and a description of all oral, Contracts to which either of SonicNet or Box is a
party, which Contracts will be contributed to SonicNet LLC or Box LLC, as the
case may be, pursuant to the SonicNet-LLC
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Contribution Agreement or the Box-LLC Contribution Agreement, as the case may
be, or to which any Tune Subsidiary is a party, in each case other than any
Contract which is an Excluded Tune Asset and except for any such Contract
providing for payments to or by any of the Tune Entities, as the case may be,
over the remaining term of such Contracts of no more than $15,000 individually
or $200,000 in the aggregate for all such non-scheduled Contracts. Except as
disclosed on Schedule 6.6, after giving effect to the contribution to SonicNet
LLC and Box LLC, respectively, of the SonicNet LLC Assets and the Box LLC
Assets, (i) all such Contracts are valid and binding on, and enforceable
against, Box LLC, SonicNet LLC or the applicable Tune Subsidiary, as the case
may be, in accordance with their terms, except as such enforceability may be
limited by applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization or affecting creditors' rights generally and except
to the extent that injunctive or other equitable relief is within the discretion
of a court and, to the knowledge of the Tune Entities, as the case may be, all
such Contracts are valid and binding on, and enforceable against the other
parties thereto, subject to the terms thereof, except as such enforceability may
be limited by applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization or affecting creditors' rights generally and except
to the extent that injunctive or other equitable relief is within the discretion
of a court, (ii) none of the Tune Entities, nor, to the knowledge of any of the
Tune Entities, any other party to any such Contract is in breach thereof or
default thereunder and (iii) there does not exist under any provision of any
such contract, to the knowledge of the Tune Entities, any event that, with the
giving of notice or the lapse of time or both, would constitute such a breach or
default, except with respect to the foregoing clauses (i)-(iii) for all such
failures to be valid, binding and enforceable and such breaches, defaults,
events and disputes which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the SonicNet LLC
Assets, the Box LLC Assets and the assets of the Tune Subsidiaries, taken as a
whole, or SonicNet LLC and Box LLC, taken as a whole. True and complete copies
of all written, and accurate summaries of all oral, Contracts set forth on
Schedule 6.6 have been made available to MTVN.
6.7. No Changes. Except as set forth on Schedule 6.7(a), (A)
since March 31, 1999, each of SonicNet, Box and the Tune Subsidiaries has
conducted its respective business only in the ordinary course of business
consistent with past practice, the MOU and the budget attached hereto as
Schedule 6.7(b) (the "Tune Budget"), and (B) since December 31, 1998 there has
not been: (i) any material adverse change in the financial condition, results of
operations or business of SonicNet, Box or the Tune Subsidiaries, except for (x)
material adverse changes that may have resulted from the public announcement of
the execution of the MOU or (y) Material Adverse Change Exclusions, (ii) any
termination of any Contract (which, solely for purposes of this Section 6.7,
shall mean Contracts identified as if the Closing had occurred on May 19, 1999)
to which any of SonicNet, Box, SonicNet LLC, Box LLC or the other Tune
Subsidiaries is a party (other than Contracts which expire in accordance with
their terms) or (iii) any dividend or other distribution to TCI Music of any
assets of SonicNet or Box, other than any Excluded Tune Asset or Excluded
Subsidiary.
6.8. No Brokerage. There is no investment banker, broker,
finder or other similar intermediary which has been retained by any of the Tune
Entities or is authorized to act on behalf of any of the Tune Entities or any
Affiliates thereof or any of their respective officers and directors who might
be entitled to any fee or commission from any of the MTVN Entities or
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any Affiliates thereof, the Partnership or any of its subsidiaries upon
consummation of the transactions contemplated by this Agreement or the Operative
Agreements.
6.9. Absence of Litigation. Except as set forth in Schedule
6.9, there is no action, suit, investigation, claim, arbitration or litigation
pending or, to the knowledge of any of the Tune Entities, threatened against any
of the Tune Entities or their business and operations insofar as it relates to
the SonicNet LLC Assets, the Box LLC Assets, the SonicNet Membership Interests,
the Box Membership Interests, Box LLC, SonicNet LLC or the assets of any Tune
Subsidiary, at law or in equity, before or by any arbitrator or Governmental
Entity, except for any such actions, suits, investigations, claims, arbitrations
or litigations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the SonicNet LLC Assets, the Box
LLC Assets and the assets of the Tune Subsidiaries, taken as a whole, or
SonicNet LLC and Box LLC, taken as a whole. None of the Tune Entities is
currently operating under or subject to any order, award, judgment, writ,
decree, determination or injunction, in any such case specific to the use by any
Tune Entity of the SonicNet LLC Assets, the Box LLC Assets, the SonicNet
Membership Interests, the Box Membership Interests or the assets of any Tune
Subsidiary, of any arbitrator or Governmental Entity (other than the FCC
Licenses and other Permits listed on Schedule 6.13(c)).
6.10. Real Property; Totality and Conditions of Assets.
(a) There is no real property owned by the Tune Entities and
included in the SonicNet LLC Assets and the Box LLC Assets.
(b) Schedule 6.10(b) contains a true and complete list of all
written, and a description of all oral licenses or leases of real property by
the Tune Entities which are included in the SonicNet LLC Assets and the Box LLC
Assets (collectively, the "Real Property").
(c) The Real Property (including all buildings and structures)
is (i) in all material respects adequate for the uses for which it is used by
the Tune Entities, (ii) in compliance with all material restrictions of record
and other recorded Liens, (iii) not the subject of any pending condemnation,
eminent domain or inverse condemnation, and (iv) not the subject of any contract
or other restrictions of any nature whatsoever (recorded or, to the knowledge of
the Tune Entities, unrecorded) other than the leases and licenses pertaining
thereto, as set forth in Schedule 6.10(b), that prevents or limits any Tune
Entities' right to transfer its interest in any such Real Property.
(d) SonicNet LLC, Box LLC and the other Tune Subsidiaries, as
applicable, after giving effect to the transactions contemplated in the Box-LLC
and SonicNet-LLC Contribution Agreements, (i) have good leasehold interests in
the Real Property, free and clear of all Liens other than interests of the
lessors therein, except as disclosed on Schedule 6.10(d), (ii) enjoy peaceful
and quiet possession of each Real Property occupied by it, and (iii) have full
legal and practical access to each Real Property that it occupies, in each case
other than where the failure to have such rights, title or interest would have a
material adverse effect on such Real Property.
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(e) All leases, licenses or similar agreements relating to any
use or operation by any Tune Entity of any Real Property are identified or
described on Schedule 6.10(b) hereto; true and complete copies or written
descriptions thereof have been made available to MTVN; each Tune Entity which is
a party to any thereof is in compliance in all material respects with the terms
thereof; and all such leases, licenses or similar agreements are in full force
and effect, and no Tune Entity is aware of a default or prospective default
thereunder by any other party thereto, nor has any of them received notice
asserting the existence of any such default; and there are no facts known to any
Tune Entity that would prevent any Real Property from being occupied after the
Closing in substantially the same manner as before, in each case except as set
forth in Schedule 6.10(b).
(f) SonicNet LLC and Box LLC, after giving effect to the
contribution thereto of the SonicNet LLC and Box LLC Assets, and the Tune
Subsidiaries are the sole owners of and have good title to or a valid leasehold
interest in the SonicNet LLC Assets, the Box LLC Assets and the assets of the
Tune Subsidiaries, respectively (other than Real Property), respectively, free
and clear of any Liens, except for and subject only to Liens listed on Schedule
6.6 and those which would not, individually or in the aggregate, be expected to
have a material adverse effect on the SonicNet LLC Assets, the Box LLC Assets
and the assets of the Tune Subsidiaries, taken as a whole, or SonicNet LLC and
Box LLC, taken as a whole. SonicNet and Box are the sole owners of the SonicNet
Membership Interests and the Box Membership Interests, respectively, free and
clear of all Liens. The SonicNet LLC Assets, the Box LLC Assets and the assets
of the Tune Subsidiaries are in all material respects in good operating
condition and repair in accordance with normal and customary industry practices
for items of comparable age and use, reasonable wear and tear excepted.
(g) Box Europe has no material assets other than its equity
interests in Video Jukebox Network Europe, Ltd., the Box Music Network S.L., Box
Italy and Box Holland.
6.11. Environmental. Except in accordance with applicable Law,
none of the Tune Entities has generated, stored, transported, or disposed of any
Hazardous Substances at any real property owned, leased, occupied, or otherwise
held by any Tune Entity (or in which it previously had an interest) and which
are included in the Tune Contribution. There have been no releases of Hazardous
Substances in violation of any applicable Law on any real property owned,
leased, occupied or otherwise held by any of SonicNet, Box or any Tune
Subsidiary (including any Real Property in which any of SonicNet, Box or any
Tune Subsidiary previously had an interest) and which are included in the Tune
Contribution which could have a material adverse effect on the SonicNet LLC
Assets, the Box LLC Assets and the assets of the Tune Subsidiaries, taken as a
whole. To the knowledge of the Tune Entities, there are no underground storage
tanks or, except in accordance with applicable Law, asbestos-containing
materials, at or on any real property owned, leased, occupied, or otherwise held
by any Tune Entity (including any real property in which any of SonicNet, Box or
any Tune Subsidiary previously had an interest) and relating to the SonicNet LLC
Assets, the Box LLC Assets, the SonicNet Membership Interests, the Box
Membership Interests, SonicNet LLC, Box LLC or the other Tune Subsidiaries. No
Tune Entity has received any notice, request for information, order, claim, or
demand from any Governmental Entity with respect to the generation, storage,
release, or removal of any Hazardous Substance or asbestos.
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For purposes of this Agreement, "Hazardous Substances" means
any toxic, caustic, or otherwise dangerous substance regulated under federal,
state or local environmental statutes, rules, ordinances, or orders, including,
but not limited to (i) "hazardous substance" as defined in 42 U.S.C. Section
9601, (ii) petroleum products, derivatives, byproducts and other hydrocarbons,
and (iii) asbestos or asbestos containing materials.
6.12. Contribution of Assets; Operation of Business.
(a) Except as set forth on Schedule 6.12(a) and except for the
Excluded Tune Assets, the SonicNet LLC Assets and the Box LLC Assets include all
assets owned, used or held for use by SonicNet or Box or their Affiliates which
relate to, or are reasonably necessary for use in connection with their
business, including all of the capital stock of the direct and indirect
subsidiaries of SonicNet and Box which exclusively conduct the international
businesses of SonicNet and Box.
(b) Since May 19, 1999, Tune has and has caused its
subsidiaries to fund the assets and businesses included in the Tune Contribution
with sufficient capital to fund operations in accordance with the Tune Budget.
For purposes of this Section 6.12, such fundings include Tune's overhead charged
and allocated in the same manner as historically charged and allocated to Box
and SonicNet and as reflected in the Tune Budget.
(c) Schedule 6.12(c) sets forth each tangible asset included
in the Tune Contribution with a book value as of June 30, 1999 greater than
$1,000.
6.13. Compliance with Laws; Permits.
(a) Each of the Tune Entities is in compliance in all material
respects with all Laws applicable to its use of the SonicNet LLC Assets and the
Box LLC Assets, as well as all Laws applicable to the SonicNet Membership
Interests, the Box Membership Interests, SonicNet LLC or Box LLC or the other
Tune Subsidiaries.
(b) Each of the Tune Entities has obtained and holds all
Permits (collectively, the "Tune Permits") necessary in order to use and operate
the SonicNet LLC Assets and the Box LLC Assets and the assets of the Tune
Subsidiaries, as currently used and operated, none of which has been modified or
rescinded and all of which were validly issued and are in full force and effect
except such as would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the SonicNet LLC Assets and the
Box LLC Assets and the assets of the Tune Subsidiaries, taken as a whole, or
SonicNet LLC and Box LLC, taken as a whole. No event is known by any Tune Entity
to have occurred and be continuing that permits, or after notice or lapse of
time or both would permit, any modification or termination of any material Tune
Permit.
(c) Schedule 6.13(c) sets forth a true and complete list of
all Tune Permits (the "FCC Licenses") held by any of the Tune Entities issued by
the Federal Communications Commission (the "FCC") and relating to the SonicNet
LLC Assets, the Box LLC Assets, the SonicNet Membership Interests, the Box
Membership Interests, SonicNet LLC, Box LLC and the
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assets of the Tune Subsidiaries and of all other material Permits held by the
Tune Entities and relating to the SonicNet LLC Assets, the Box LLC Assets, the
SonicNet Membership Interests, the Box Membership Interests, SonicNet LLC, Box
LLC and the assets of the Tune Subsidiaries.
(d) The FCC Licenses identified on Schedule 6.13(c) are held
by the Person identified on Schedule 6.13(c) as the licensee of such FCC
License. Schedule 6.13(c) also sets forth the expiration date of each FCC
License. The FCC Licenses are validly issued and in full force and effect.
Except as disclosed on Schedule 6.13(d), (i) no licenses, permits or
authorizations (other than such as are not material) of any Governmental Entity
other than the FCC are required for the operation of the Stations in the manner
as currently conducted, and (ii) such FCC Licenses constitute all of the
licenses and authorizations required under the Communications Act for, and/or
used in the operation of, the Stations as currently operated. Except as
disclosed on Schedule 6.13(d), there is not pending or, to the knowledge of any
of the Tune Entities, threatened any action, suit, investigation, claim,
arbitration or litigation by or before the FCC to revoke, restrict, cancel,
rescind, modify or deny renewal of any of the FCC Licenses, and there is not
issued, outstanding, pending or, to the knowledge of any of the Tune Entities,
threatened by or before the FCC any order to show cause, notice of violation,
notice of apparent liability, notice of forfeiture or complaint against any of
the Tune Entities relative to the FCC. Each of the applicable Tune Entities is
operating in compliance with the terms of the applicable FCC Licenses, the
Communications Act, and the current rules, regulations, and published policies
of the FCC. Complete and correct copies of the FCC Licenses have been made
available to MTVN.
6.14. Taxes. Except as disclosed on Schedule 6.14:
(a) Each of SonicNet LLC, Box LLC and the other Tune
Subsidiaries has timely filed all Tax Returns required to be filed by it. All
such Tax Returns are true, correct and complete.
(b) Each of SonicNet LLC, Box LLC and the other Tune
Subsidiaries has paid all Taxes required to be paid by it other than those which
are subject to a good faith dispute and are not material.
(c) There is no audit, litigation or other proceeding or
proposed or outstanding assessment or deficiency with respect to Taxes pending
or, to the knowledge of any of the Tune Entities, or threatened with respect to
any of SonicNet LLC, Box LLC and the other Tune Subsidiaries.
(d) Each of SonicNet LLC, Box LLC and the other Tune
Subsidiaries has complied with all legal requirements regarding information
reporting and withholding and payment over of Taxes with respect to payments
made to third parties.
(e) None of SonicNet LLC, Box LLC and the other Tune
Subsidiaries is subject to any closing agreement or similar agreement with
respect to Taxes.
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(f) Each of SonicNet LLC and Box LLC has a single owner and
is, and at all times has been, treated for federal, and, to the extent permitted
by applicable Law, state and local, tax purposes, as disregarded as an entity
separate from its owner.
(g) The classification of each of the Tune Subsidiaries for
U.S. federal income tax purposes (e.g., as a corporation, partnership or
disregarded entity) is set forth in Schedule 6.14(g).
6.15. Intellectual Property.
(a) The Tune Entities (other than TCI Music) have sufficient
title and ownership of, and rights to use, Intellectual Property, including the
Intellectual Property that is the subject matter of Schedule 6.9 (whether by
ownership or License, and whether or not listed in Schedule 6.15 referred to
below), included in the SonicNet LLC Assets or the Box LLC Assets or owned, used
or held for use by any of the Tune Subsidiaries, necessary to conduct their
respective businesses as now conducted and as currently proposed to be conducted
without any conflict with or infringement of the rights of others, and such
rights will not be adversely affected by the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(b) Schedule 6.15(b) contains a true, accurate and complete
list as of the date hereof of all Intellectual Property that constitutes
patents, patent applications, trademark and service marks and corresponding
registrations and applications for registration thereof, and registered
copyrights and corresponding registrations and applications for registration
thereof, as well as internet domain names, included in the SonicNet LLC or Box
LLC Assets or in which any of the Tune Subsidiaries has any right, title or
interest (the "Tune Scheduled Intellectual Property").
(c) Schedule 6.15(c) further sets forth a true, accurate and
complete list as of the date hereof of all Outstanding Licenses of the Tune
Entities (other than TCI Music), identifying the other parties thereto and the
subject matter and date thereof.
(d) Except as set forth in Schedule 6.15(c), the Tune Entities
(other than TCI Music) have sole and exclusive beneficial and record ownership,
legal title and the right to use of all of their respective Intellectual
Property (whether or not listed in Schedule 6.15(b)), free and clear of Liens
and any rights or claims of present or former employees, consultants, officers
and directors of any of the Tune Entities or any other Persons, and there are no
Outstanding Licenses.
(e) Except as set forth in Schedule 6.15(c), the Tune Entities
have not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property of third parties, nor have any of
them received any communications alleging that it has violated or is violating
any of the Intellectual Property of any other Person, and (without limiting any
of the other representations and warranties herein), to the knowledge of the
Tune Entities, there is not any basis for the making of any such allegation.
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(f) Except as set forth in Schedule 6.15(c), there is not
pending, nor to the Tune Entities' knowledge has there been threatened, any
action or proceeding to contest, oppose, cancel or otherwise challenge the
validity, ownership or enforceability of any of the Intellectual Property of the
Tune Entities included in the Tune Contribution.
(g) To the knowledge of the Tune Entities, none of its
employees or consultants is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interests
of such Tune Entity, or with each such consultant's performance of its
contractual obligations or other presently contemplated duties to the such Tune
Entity.
6.16 [Intentionally Left Blank]
6.17. Absence of Liabilities. There are no liabilities or
obligations relating to the Box Membership Interests and the SonicNet Membership
Interests other than the Box Assumed Liabilities and the SonicNet Assumed
Liabilities, and SonicNet LLC, Box LLC and the Tune Subsidiaries have no
liabilities or obligations (i) relating to periods prior to the Closing other
than with respect to certain accounts payable, accrued expenses, prepayments and
similar working capital items reflected in the balance sheet attached as Exhibit
A to Schedule 6.17 or of the same types as such items reflected on the balance
sheet which were incurred since the date thereof in the ordinary course of
business and consistent with past practice and are not in excess of historical
amounts for comparable periods (provided, however, that such liabilities and
obligations shall not include liabilities or obligations relating to any Tune
Benefit Plan) or (ii) with respect to periods after the Closing, other than
liabilities or obligations arising after, and with respect to the period
following, the Closing under the Tune Assigned Contracts.
6.18. Employee Benefits.
(a) Set forth on Schedule 6.18 hereto is a complete and
correct list of any Tune Benefit Plan which covers any SonicNet LLC Employee or
Box-MTVN Employee. Except as set forth in Schedule 6.18(a), none of SonicNet,
Box, SonicNet LLC, Box LLC, the Tune Subsidiaries or any of their Affiliates has
communicated to present or former employees of SonicNet, Box, SonicNet LLC, Box
LLC or the Tune Subsidiaries or adopted or authorized any additional material
Tune Benefit Plan or any material change in or termination of any existing Tune
Benefit Plan.
(b) With respect to any "defined benefit plan", within the
meaning of Section 3(35) of ERISA, maintained or contributed to by SonicNet,
Box, SonicNet LLC, Box LLC, any of the Tune Subsidiaries or any of their ERISA
Affiliates within the last six years: (i) no liability to the PBGC has been
incurred (other than for premiums not yet due); (ii) no notice of intent to
terminate any such plan has been filed with the PBGC or distributed to
participants and no amendment terminating any such plan has been adopted which
could result in any liability to the Tune Entities, the Partnership or the MTVN
Entities; (iii) no proceedings to terminate any such plan have been instituted
by the PBGC and no event or condition has occurred which might constitute
grounds under Section 4042 of ERISA for the termination of, or
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the appointment of a trustee to administer, any such plan; (iv) no "accumulated
funding deficiency," within the meaning of Section 302 of ERISA or Section 412
of the Code, whether or not waived, has been incurred; and (v) no Lien has
arisen under ERISA or the Code, or is likely to arise, on the assets of
SonicNet, Box, SonicNet LLC, Box LLC or any of the Tune Subsidiaries.
(c) Neither SonicNet, Box, SonicNet LLC, Box LLC or any of the
Tune Subsidiaries has incurred any liability with respect to any "multiemployer
plan," within the meaning of Section 3(37) of ERISA to which any Tune Entity or
any of its ERISA Affiliates has contributed or been required to contribute,
other than for contributions not yet due.
(d) Neither SonicNet, Box, SonicNet LLC, Box LLC or any of the
Tune Subsidiaries has any liability, contingent or otherwise, under Section 4069
or 4212 of ERISA.
(e) With respect to any Box Employment Contract or any
employment contract which will be contributed to SonicNet LLC pursuant to the
SonicNet-LLC Contribution Agreement (an "Assigned Tune Employment Contract"):
(i) None of the Tune Entities, nor, to the knowledge
of any of the Tune Entities, any other party to any Assigned Tune Employment
Contract is in breach thereof or default thereunder (or would, with the giving
of notice or lapse of time or both, be in breach or default);
(ii) There does not exist under any provision of any
such Assigned Tune Employment Contract, to the knowledge of the Tune Entities,
any event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default;
(iii) Neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement, will (A)
increase the amount of any payments or benefits otherwise payable under any
Assigned Tune Employment Contract, (B) result in the acceleration of the time of
payment, exercisability, funding or vesting of any such payments or benefits, or
(C) result in any payment (whether severance pay or otherwise) becoming due
under any Assigned Tune Employment Contract;
(iv) No payment or series of payments that would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code) has been made or will be made under any Assigned Tune Employment Contract
in connection with the execution of this Agreement or as a result of the
consummation of the transactions contemplated hereby; and
(v) True and complete copies of any Assigned Tune
Employment Contract have been provided to MTVN.
(f) With respect to any Tune Benefit Plan which covers only
employees of Box Italy or any Tune Subsidiary other than SonicNet LLC or Box LLC
("Tune Subsidiary Benefit Plan"):
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(i) All contributions and premium payments required
to have been paid under or with respect to any Tune Subsidiary Benefit Plan have
been timely paid or accrued;
(ii) Each Tune Subsidiary Benefit Plan is and has
been operated and administered in all material respects in accordance with its
terms, the terms of any applicable collective bargaining agreement, and all
applicable Laws;
(iii) There are no actions, suits, or claims (other
than routine claims for benefits in the ordinary course) with respect to any
Tune Subsidiary Benefit Plan pending which could give rise to a material
liability to the Partnership or its subsidiaries, or to the knowledge of any of
the Tune Entities threatened, and none of the Tune Entities has any knowledge of
any facts which could give rise to any such actions, suits or claims (other than
routine claims for benefits in the ordinary course);
(iv) No Tune Subsidiary Benefit Plan is currently
under governmental investigation or audit and, to the knowledge of the Tune
Entities no such investigation or audit is contemplated or under consideration;
(v) Except as provided in Schedule 6.18(f)(v),
neither the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement, will (i) increase the amount of benefits
otherwise payable under any Tune Subsidiary Benefit Plan, (ii) result in the
acceleration of the time of payment, exercisability, funding or vesting of any
such benefits, or (iii) result in any payment (whether severance pay or
otherwise) becoming due to, or with respect to, any current or former employee
or director of SonicNet, Box, SonicNet LLC, Box LLC or any of the Tune
Subsidiaries; and
(vi) No payment or series of payments that would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code) has been made or will be made by SonicNet, Box, SonicNet LLC, Box LLC or
any of the Tune Subsidiaries, directly or indirectly, to any employee in
connection with the execution of this Agreement or as a result of the
consummation of the transactions contemplated hereby.
(g) Neither the employees of Box Italy nor the employees of
any Tune Subsidiary other than SonicNet LLC or Box LLC are covered by any
employee benefit plan other than a Tune Subsidiary Benefit Plan.
6.19. Certain Restrictive Provisions. Neither the Partnership
nor any of its subsidiaries shall be subject to any non-competition provision,
exclusivity provision, output or requirement contract or right of first refusal
or other similar contractual restrictions on its ability to conduct its business
(collectively, the "Restrictive Provisions") by virtue of the Partnership's
assumption either directly or through a subsidiary of any contract or other
arrangement of SonicNet or Box or any of their subsidiaries or as a result of
the Partnership being a successor to either SonicNet or Box, other than such
Restrictive Provisions as would apply solely to the SonicNet Contribution or the
Box Contribution, as the case may be, and other than those set forth in the
contracts and arrangements disclosed on Schedule 6.19 hereto.
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6.20. Employees.
(a) Except as set forth on Schedule 6.20(a) attached hereto,
no employees of Box, SonicNet, Box LLC, SonicNet LLC, Box Italy or the other
Tune Subsidiaries are represented by a labor union or other labor organization.
Within the last three years, there have been no strikes, work stoppages or other
material labor disputes involving employees of Box, SonicNet, Box LLC, SonicNet
LLC, Box Italy or any other Tune Subsidiary.
(b) During the period from May 19, 1999 to the Closing,
neither TCI Music nor any of its Controlled Affiliates (other than Box, SonicNet
or its subsidiaries) has hired any person that was an employee of SonicNet or
Box or their subsidiaries at any time during such period.
(c) Since May 19, 1999, neither TCI Music nor any of its
Controlled Affiliates has hired any person who would otherwise become an
employee of the Partnership or any of its subsidiaries upon consummation of the
Closing.
6.21. Agreements. From May 19, 1999 to the date hereof, except
as set forth on Schedule 6.21 and except as MTVN has consented to in writing
(including by e-mail):
(a) neither SonicNet, Box nor any of their subsidiaries has
entered into or renewed any affiliation agreement or amended any of the terms of
any existing affiliation agreement which is part of the Tune Contribution.
(b) neither Box nor any of its subsidiaries has exercised its
option under any existing affiliation agreement to roll out the Box Service onto
any cable or other system, and
(c) neither Box, SonicNet nor any of their subsidiaries has
entered into, renewed or amended any agreement involving any significant
expenditure or obligation which the Partnership or any of its subsidiaries would
be obligated to pay or bear after the date hereof other than as provided in the
Tune Budget.
6.22. Year 2000 Compliance.
(a) The Tune Entities (which, for purposes of this Section
6.22, shall not include TCI Music) believe that their products and their
suppliers and vendors will be Year 2000 Compliant before October 1, 1999,
assuming that the Partnership, after the Closing, will pursue the plans
developed for the assets and businesses included in the Tune Contribution.
(b) The Tune Entities (i) are developing a detailed plan and
timeline for becoming Year 2000 Compliant on a timely basis, and (ii) are
implementing that plan in accordance with that timetable in all material
respects. The Tune Entities reasonably anticipate that they will be Year 2000
Compliant on a timely basis, assuming that the Partnership, after the Closing,
will pursue the plans developed for the assets and businesses included in the
Tune Contribution.
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(c) As used herein, the term "Year 2000 Compliant" means, with
respect to an entity, that all software in goods produced or sold by, or
utilized by and material to the business operations or financial condition of,
such entity are able to interpret and manipulate data on and involving all
calendar dates correctly and without causing any abnormal ending scenario,
including in relation to dates in and after the Year 2000.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1. Survival. All representations, warranties, covenants and
agreements contained in this Agreement or in any schedule, exhibit, certificate,
agreement, document or statement delivered pursuant hereto shall survive
indefinitely after (and not be affected in any respect by) the Closing and any
investigation conducted by any party hereto; provided, however, that the
representations and warranties set forth in Articles 4, 5 and 6, the schedules
related thereto and in any certificate delivered in connection herewith with
respect to any of those representations and warranties will terminate and expire
on the second anniversary of the Closing Date except as follows: (a) the
representations and warranties which relate expressly or by necessary
implication to Taxes, ERISA or other employment or labor matters (as modified by
the schedules related thereto) will survive until the expiration of the
applicable statutes of limitations (including all periods of extension and
tolling); (b) the representations and warranties which relate expressly or by
necessary implication to the environment or environmental Laws (as modified by
the schedules related thereto) will survive for a period of five years from the
Closing Date; and (c) the representations and warranties set forth in Sections
4.1, 4.2, 5.1, 5.2, 6.1, 6.2, 6.10 (f) (first sentence (only as it relates to
the equity interests in the Tune Subsidiaries) and second sentence only) and
6.10 (g) (as modified by the schedules related thereto) will survive
indefinitely. After a representation and warranty has terminated and expired, no
indemnification will or may be sought pursuant to this Article 7 on the basis of
a breach or inaccuracy of that representation and warranty by any Person who
would have been entitled pursuant to this Article 7 to indemnification on the
basis of a breach or inaccuracy of that representation and warranty prior to its
termination and expiration; provided that in the case of each representation and
warranty that will terminate and expire as provided in this Section 7.1, no
claim presented in writing for indemnification pursuant to this Article 7 on the
basis of a breach or inaccuracy of that representation and warranty prior to its
termination and expiration will be affected in any way by that termination and
expiration.
7.2. Indemnification by Viacom, Imagine and VLLC. The MTVN
Entities shall jointly and severally indemnify and hold Liberty, TCI Music, Box,
SonicNet, and their shareholders, employees, officers, directors and agents
(collectively, the "Tune Indemnified Parties") and the Partnership, the General
Partner, and their respective employees, officers, directors and agents
(collectively, the "Partnership Indemnified Parties"), without duplication,
harmless from and against, and agree promptly to defend any such Indemnified
Party from and reimburse any such Indemnified Party for, any and all Losses
which any such Indemnified Party may suffer or incur, or become subject to,
arising out of or resulting from, without duplication:
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(a) any breach or inaccuracy as of the date of this Agreement
of any of the representations and warranties made by the MTVN Entities in or
pursuant to this Agreement or the Contribution Agreements or in any instrument
or certificate delivered by any of the MTVN Entities in accordance herewith (it
being understood and agreed that, notwithstanding anything to the contrary
contained in this Agreement, except to the extent provided in Section 8.16, to
determine if there had been an inaccuracy or breach of a representation or
warranty of any of the MTVN Entities and the Losses arising from such inaccuracy
or breach for purposes of this indemnity, such representation and warranty shall
be read as if it were not qualified by materiality, including, without
limitation, qualifications indicating accuracy in all material respects, or
accuracy except to the extent the inaccuracy will not have a material adverse
effect); provided, the MTVN Entities shall not be required to indemnify the Tune
Indemnified Parties or the Partnership Indemnified Parties under this Section
7.2(a) for any Losses arising out of a breach of any of the representations or
warranties contained herein insofar as they relate to (x) the failure to
disclose the need for any consents required in connection with nonassignment or
change of control provisions in connection with the transactions contemplated
hereby or (y) any termination or breach or other effect of the failure to obtain
a waiver or consent in connection with the transactions contemplated hereby; and
provided further that the indemnification under this clause (a), insofar as it
relates to any assets or businesses contributed or to be contributed to the
Partnership or to any liabilities or obligations assumed or to be assumed by the
Partnership pursuant to the applicable Contribution Agreements, shall be for the
benefit only of the Partnership Indemnified Parties and not the Tune Indemnified
Parties.
(b) any failure by any of the MTVN Entities to carry out,
perform, satisfy and discharge any of their respective covenants, agreements,
undertakings, liabilities or obligations under this Agreement and the
Contribution Agreements to which any MTVN Entity is a party; and
(c) any liability or obligation of any MTVN Entity which is
not included in the VLLC Liabilities or the Imagine Liabilities; provided,
however, that the indemnification under this clause (c) shall be for the benefit
only of the Partnership Indemnified Parties and not the Tune Indemnified
Parties.
7.3. Indemnification by TCI Music, SonicNet and Box. TCI
Music, SonicNet and Box shall jointly and severally indemnify and hold the MTVN
Entities and their shareholders, employees, officers, directors and agents
(collectively, the "MTVN Indemnified Parties") and the Partnership Indemnified
Parties, without duplication, harmless from and against, and agree promptly to
defend any such Indemnified Party from and reimburse any such Indemnified Party
for, any and all Losses which any such Indemnified Party may suffer or incur, or
become subject to, arising out of or resulting from, without duplication:
(a) any breach or inaccuracy as of the date of this Agreement
of any of the representations and warranties made by TCI Music, SonicNet or Box
in or pursuant to this Agreement or the Contribution Agreements or in any
instrument or certificate delivered by any of TCI Music, SonicNet or Box in
accordance herewith (it being understood and agreed that, notwithstanding
anything to the contrary contained in this Agreement, except to the extent
provided in Section 8.16, to determine if there had been an inaccuracy or breach
of a
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representation or warranty of any of TCI Music, SonicNet or Box and the Losses
arising from such inaccuracy or breach for purposes of this indemnity, such
representation and warranty shall be read as if it were not qualified by
materiality, including, without limitation, qualifications indicating accuracy
in all material respects, or accuracy except to the extent the inaccuracy will
not have a material adverse effect); provided, TCI Music, SonicNet and Box shall
not be required to indemnify the MTVN Indemnified Parties or the Partnership
Indemnified Parties under this Section 7.3(a) for any Losses arising out of a
breach of any of the representations or warranties set forth herein insofar as
they relate to (x) the failure to disclose the need for any consents required in
connection with nonassignment or change of control provisions in connection with
the transactions contemplated hereby or (y) any breach or termination or other
effect of the failure to obtain a waiver or consent in connection with the
transactions contemplated hereby; and provided further that the indemnification
under this clause (a), insofar as it relates to any assets or businesses
contributed or to be contributed to the Partnership or to any liabilities or
obligations assumed or to be assumed by the Partnership pursuant to the
applicable Contribution Agreements, shall be for the benefit only of the
Partnership Indemnified Parties and not the MTVN Indemnified Parties.
(b) any failure by any of TCI Music, SonicNet, Box, SonicNet
LLC or Box LLC to carry out, perform, satisfy and discharge any of their
respective covenants, agreements, undertakings, liabilities or obligations under
this Agreement and the Contribution Agreements to which TCI Music, SonicNet,
Box, SonicNet LLC or Box LLC, as the case may be, is a party;
(c) any liability or obligation of TCI Music, SonicNet, Box,
SonicNet LLC, Box LLC and any Tune Subsidiary other than the Box Assumed
Liabilities and the SonicNet Assumed Liabilities and liabilities or obligations
of the Tune Subsidiaries (x) for periods prior to the Closing with respect to
certain accounts payable, accrued expenses, prepayments and similar working
capital items disclosed in the balance sheet attached as Exhibit A to Schedule
6.17 or of the same types as such items reflected on the balance sheet which
were incurred since the date thereof in the ordinary course of business and
consistent with past practice and are not in excess of historical amounts for
comparable periods (but not including liabilities or obligations relating to any
Tune Benefit Plan) and (y) for periods from and after the Closing arising under
the Tune Assigned Contracts; provided, however, that the indemnification under
this clause (c) shall be for the benefit only of the Partnership Indemnified
Parties and not the MTVN Indemnified Parties; and provided further that nothing
contained in the foregoing shall limit the liabilities and obligations of the
Partnership pursuant to Sections 3.4, 3.5 and 3.6 of this Agreement.
(d) any Taxes imposed on any of the Tune Entities attributable
to any taxable period or portion thereof ending on or prior to the Closing; and
(e) any liability or obligation arising under any Tune Benefit
Plan or as a result of the employment or termination of employment of employees
or former employees of Box, SonicNet, Box LLC, SonicNet LLC, Box Italy or the
other Tune Subsidiaries, or the provision of services or termination of
provision of services by directors, consultants, agents or independent
contractors of Box, SonicNet, Box LLC, SonicNet LLC, Box Italy or the other Tune
Subsidiaries (including, without limitation, salaries, bonuses, payroll taxes,
severance obligations, contributions to and benefits under the Tune Benefit
Plans and all other employment
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or service related claims), excluding (i) any liability or obligation arising
after the Closing under the Assigned Tune Employment Contracts; (ii) any
liability or obligation arising after the Closing under any Tune Subsidiary
Benefit Plan with respect to any SonicNet LLC Employee or Box-MTVN Employee; or
(iii) any liability or obligation with respect to the employment or termination
of employment of any SonicNet LLC Employee or Box-MTVN Employee arising after
the Closing.
7.4. Indemnification by Liberty. Liberty shall indemnify and
hold the MTVN Indemnified Parties and the Partnership Indemnified Parties,
without duplication, harmless from and against, and agree promptly to defend any
such Indemnified Party from and reimburse any such Indemnified Party for, any
and all Losses which any such Indemnified Party may suffer or incur, or become
subject to, arising out of or resulting from, without duplication:
(a) any breach or inaccuracy as of the date of this Agreement
of any of the representations and warranties made by it in or pursuant to this
Agreement or in any instrument or certificate delivered by it in accordance
herewith (it being understood and agreed that, notwithstanding anything to the
contrary contained in this Agreement, to determine if there had been an
inaccuracy or breach of a representation or warranty of Liberty and the Losses
arising from such inaccuracy or breach, for purposes of this indemnity, such
representation and warranty shall be read as if it were not qualified by
materiality, including, without limitation, qualifications indicating accuracy
in all material respects, or accuracy except to the extent the inaccuracy will
not have a material adverse effect);
(b) any failure by Liberty to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or the Parent Agreement.
7.5. Indemnification by the Partnership. The Partnership shall
indemnify and hold the MTVN Indemnified Parties and the Tune Indemnified Parties
harmless from and against, and agree promptly to defend any such Indemnified
Party from and reimburse any such Indemnified Party for, any and all Losses
which any such Indemnified Party may suffer or incur, or become subject to
(including, with respect to TCI Music, any Losses suffered or incurred by any
affiliated entity under the Irrevocable Standby Letter of Credit dated January
13, 1999 in the amount of $459,000 issued by Bank of America NT & SA for the
benefit of TM Park Avenue Associates), arising out of or resulting from, without
duplication, (a) any failure by the Partnership to carry out, perform, satisfy
and discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement and the Contribution Agreements to which it is
a party, (b) the VLLC Liabilities and the Imagine Liabilities, (c) the Box LLC
Liabilities and the SonicNet LLC Liabilities, (d) any liabilities which arise
out of a breach or violation of any non-assignment or change of control
provision insofar as such breach or violation resulted from or arose out of
(including as a result of a claim of anticipatory breach of contract) the
consummation of the transactions contemplated hereby, including any failure to
obtain any consent or waiver, and (e) all other liabilities assumed by the
Partnership (but only to the extent so assumed) under any Contribution
Agreements or under any other Contract entered into by or assigned or
contributed to, or to be assigned or contributed to, the Partnership in
connection herewith; provided, however, that the Partnership shall not be
obligated to indemnify
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any indemnified party with respect to any obligations that relate to pre-Closing
periods (other than those relating to certain accounts payable, accrued
expenses, prepayments and similar working capital items identified on the
balance sheets attached to Schedule 4.12 or 6.17 hereto or of the same types as
such items reflected on the balance sheet which were incurred since the date
thereof in the ordinary course of business and consistent with past practice and
are not in excess of historical amounts for comparable periods) or arise out of
a breach or violation prior to the Closing of any provision (other than a
non-assignment or change in control provision insofar as it relates to the
consummation of the transactions contemplated hereby, for which the Partnership
shall provide indemnity under clause (d) above) of any Contract assigned or
contributed to the Partnership in connection herewith.
7.6. Tipping Amount; Limitation on Indemnification.
Notwithstanding any other provision in this Agreement to the contrary, the MTVN
Entities shall not be obligated to pay any claims for indemnification under
Section 7.2(a), TCI Music, SonicNet and Box shall not be obligated to pay any
claims for indemnification under Section 7.3(a) and Liberty shall not be
obligated to pay any claims for indemnification under Section 7.4(a) (other
than, in each case, any such claim based on a No Basket Representation), unless,
in each case, the total Losses giving rise to such claims under Section 7.2(a),
7.3(a) or 7.4(a), as applicable, exceed $3,000,000 (the "Tipping Amount");
provided that if, in any such case, the aggregate amount of such Losses exceeds
the Tipping Amount, then the applicable indemnifying party shall be obligated to
pay the full amount of such Losses, including the Tipping Amount, except for a
deductible amount of $1,500,000. Notwithstanding anything to the contrary in
this Agreement, no group of indemnifying parties' cumulative indemnity
obligations under any of Sections 7.2(a), 7.3(a) or 7.4(a), excluding
indemnification claims for Losses arising out of any inaccuracy or breach of the
No Basket Representations, shall exceed $150,000,000, it being understood that
an obligation for indemnity under Section 7.2(a), 7.3(a) or 7.4(a), on the one
hand, and any other paragraph of Section 7.2, 7.3 or 7.4, on the other hand,
shall be deemed to be an obligation under Section 7.2(a), 7.3(a) or 7.4(a) for
purposes of the foregoing $150,000,000 limitation, but not for purposes of the
Tipping Amount.
7.7. Exclusive Remedy. The rights and remedies of the parties
hereto under this Article 7 are exclusive and in lieu of any and all other
rights and remedies which the parties hereto may have against the other under
this Agreement or any Contribution Agreement, with respect to (x) the breach or
inaccuracy of any representation or warranty made (or deemed made) by a party
hereto in or pursuant to this Agreement or any Contribution Agreement or (y) any
breach of, or failure to perform or comply with, any covenant or agreement set
forth in this Agreement or in any Contribution Agreement or in any certificate
delivered by it in accordance herewith or therewith; provided, however, that
this sentence shall not limit the rights of the parties hereto to seek specific
performance of any provision of this Agreement or any Contribution Agreement.
7.8. Indemnification Procedures. Any Party asserting a right
to indemnification under Section 7.2, 7.3, 7.4 or 7.5 shall so notify in writing
the applicable Person or Persons required hereunder to provide indemnification
pursuant to this Article 7. The indemnified party's failure to so notify the
indemnifying party of any such matter shall not release the indemnifying party,
in whole or in part, from its obligations to indemnify under this
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Article 7, except to the extent the indemnified party's failure to so notify
actually prejudices the indemnifying party's ability to defend such action. If
the facts giving rise to such indemnification shall involve any actual or
threatened claim or demand by or against a third party, the indemnifying party
shall be entitled to control the defense or prosecution of such claim or demand
in the name of the indemnified party, with counsel satisfactory to the
indemnified party, if (x) it notifies the indemnified party in writing of its
intention to do so within 20 days of its receipt of such notice, without
prejudice, however, to the right of the indemnified party to participate therein
through counsel of its own choosing, which participation shall be at the
indemnified party's expense unless (i) the indemnified party shall have been
advised by its counsel that use of the same counsel to represent both the
indemnifying party and the indemnified party would present a conflict of
interest (which shall be deemed to include any case where there may be a legal
defense or claim available to the indemnified party which is different from or
additional to those available to the indemnifying party) or (ii) the
indemnifying party shall fail to defend or prosecute in good faith such claim or
demand within a reasonable time, in which case the reasonable fees of counsel
for the indemnified party shall be for the account of indemnifying party and the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party, and (y) it agrees to accept full
responsibility indemnify and hold harmless the indemnified party in accordance
herewith in respect of the claim or demand. Whether or not the indemnifying
party chooses to defend or prosecute such claim, the Partnership and the parties
hereto shall cooperate in the prosecution or defense of such claim and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may reasonably be
requested in connection therewith. The indemnifying party shall not settle or
permit the settlement of any such third party claim or action in which any
relief other than the payment of money damages is sought against the indemnified
party without the prior written consent of the indemnified party. The
indemnified party shall not settle or permit the settlement of any claim or
action for which it is entitled to indemnification without the prior written
consent of the indemnifying party, unless the indemnifying party shall have
failed to assume the defense thereof after the notice referred to in the first
sentence of this Section 7.8, and in the manner provided above.
7.9. Subrogation. In the event of any indemnification made
pursuant to a third party claim, the indemnifying party shall be subrogated to
the extent of such payment to all of the rights of recovery of the indemnified
party, who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the indemnifying party effectively to bring suit to enforce
such rights.
ARTICLE 8
MISCELLANEOUS
8.1. Table of Contents; Headings. The table of contents and
headings of the Articles, Sections and other subdivisions of this Agreement are
for convenience of reference only and shall not modify, define or limit any of
the terms or provisions of this Agreement.
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8.2. Governing Law. This Agreement and the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed under and in accordance with the laws of the
State of New York, excluding the choice of law rules thereof.
8.3. Severability. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, that provision will be enforced to
the maximum extent permissible so as to effect the intent of the parties and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. If necessary to effect the intent of
the parties, the parties will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely as
possible reflects such intent.
8.4. Amendments. This Agreement may be modified or amended
only by a written amendment signed by each party hereto.
8.5. Counterparts. This Agreement may be executed in one or
more counterparts (and all signatures need not be on any one such counterpart),
with all such counterparts together constituting one and the same instrument.
8.6. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreement and understandings, whether written or
oral, with respect to the subject matter hereof, including the MOU.
8.7. No Presumption. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
8.8. Binding on Viacom. The parties acknowledge that MTVN is a
division of Viacom and that, consequently, Viacom is obligated to perform the
obligations to be paid or performed by MTVN hereunder. Insofar as this Agreement
refers to MTVN in the context of an operating business, it shall refer only to
the operating unit or units of Viacom that on a day-to-day basis operate the
business of MTV: Music Television or VH1 Music First. In addition, the parties
agree that the representations and warranties set forth in Sections 4.1(a),
4.2(a), 4.2(b), 4.3 and 4.7, insofar as they purport to relate to MTVN, relate
to Viacom.
8.9. Parties in Interest; Limitation on Rights of Others. Any
MTVN Entity may assign its rights and obligations under this Agreement to one or
more Affiliates of MTVN which is directly or indirectly wholly-owned (and
including for this purpose Imagine) by Viacom, Inc.; provided that, in
connection with any such assignment, the applicable MTVN Entity executes and
delivers to TCI Music an instrument, in form and substance reasonably
satisfactory to TCI Music, by which such MTVN Entity guarantees the performance
of any such assignee's obligations hereunder. TCI Music may assign any or all of
its rights and obligations under this Agreement to any of its wholly-owned
subsidiaries; provided that, in connection with any such assignment, TCI Music
executes and delivers to MTVN an instrument, in form and
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substance reasonably satisfactory to MTVN, by which TCI Music guarantees the
performance of any such assignee's obligations hereunder. No party to this
Agreement may assign any of its rights or obligations under this Agreement
except as specifically provided in this Section 8.9. The terms of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any assignment of rights hereunder
in violation hereof shall be null and void ab initio. Nothing in this Agreement,
whether express or implied, shall be construed to give any Person (other than
the parties hereto and their successors and permitted assigns) any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. None of the provisions of
this Agreement shall be for the benefit of or enforceable by any third party
except the provisions of Article 7 shall be enforceable by all Indemnified
Parties.
8.10. Waivers; Remedies. The observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in a writing signed by the
party or parties against which such waiver is to be asserted and only in the
specific instance and for the specific purpose for which given. Except as
otherwise provided herein, no failure or delay of any party in exercising any
power or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
8.11. Further Assurances. Upon reasonable request from time to
time, each of MTVN and TCI Music and their respective Controlled Affiliates
shall execute and deliver all documents and instruments and do all other acts
that may be reasonably necessary or desirable to carry out the intent and
purposes of this Agreement and give effect to the exercise by a party of its
rights hereunder.
8.12. Public Announcements. No party shall make or shall
permit any of its Affiliates to make any public announcement about the
transactions contemplated by this Agreement without the prior written consent of
the other parties hereto, which consent shall not be unreasonably withheld or
delayed. Notwithstanding any other provision contained herein, any party or
Affiliate of such party may at any time make announcements which are required by
applicable law or the rules of any national stock exchange or stock association
so long as the party or Affiliate so required to make the announcement, promptly
upon learning of such requirement, notifies the other parties of such
requirement and discusses with the other parties in good faith the exact wording
of any such announcement.
8.13. Costs and Expenses. Each party shall be solely
responsible for the payment of its own costs and expenses incurred in connection
with the negotiation and closing of the transactions contemplated hereby. Filing
fees, and sales and transfer taxes in connection with the consummation of the
transactions contemplated hereby will be borne by the Partnership.
8.14. Notices. Except as expressly provided herein, notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or
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overnight courier service, mailed (certified or registered mail, postage
prepaid, return receipt requested) or sent by facsimile copier of the sending
party, as follows:
If to Viacom, MTVN, Imagine, MTVN Online or VLLC:
MTV Networks
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Viacom International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Partnership:
MTVN Online L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Viacom International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to Tune, Box, SonicNet, Box USA or VJN LPTV:
TCI Music, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
If to Liberty:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
57
51
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇
or to such other address or attention of such other Person as any party shall
advise the other parties in writing. All notices and other communications given
to a party in accordance with the provisions of this Agreement shall be deemed
to have been given (i) three Business Days after the same are sent by certified
or registered mail, postage prepaid, return receipt requested, (ii) when
delivered by hand or transmitted by fax confirmation unless delivered on a day
which is not a Business Day in which case such notice shall be deemed to have
been given on the next succeeding Business Day or (iii) one Business Day after
the same are sent by a reliable overnight courier service, with acknowledgment
of receipt.
8.15. Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court sitting in the County of New York or any federal court of the United
States of America sitting in the Southern District of New York, and any
appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement or any Contribution Agreement, or for
recognition or enforcement of any judgment relating hereto. Each party hereby
irrevocably and unconditionally agrees that any suit, action or proceeding
against it by any other party to this Agreement with respect to this Agreement
or any Contribution Agreement shall be instituted only in any New York State
court sitting in the County of New York or any federal court sitting in the
Southern District of New York, as the party instituting such suit, action or
proceeding may elect in its sole discretion. Each party also hereby irrevocably
and unconditionally agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(b) Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any Contribution
Agreement in any New York State court sitting in the County of New York or any
federal court sitting in the Southern District of New York, and any appellate
court from any such court. Each party hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such suit, action or proceeding in any such court and further waives the
right to object, with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such party. Each party hereby irrevocably
waives the right to a jury trial in any suit, action or proceeding arising out
of or related to this Agreement or any Contribution Agreement.
(c) Each party hereby irrevocably and unconditionally consents
to service of process in the manner provided for the giving of notices pursuant
to this Agreement or any Contribution Agreement. Nothing in this Agreement or
any Contribution Agreement shall affect the right of either party to serve
process in any other manner permitted by law.
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8.16 Exceptions to Representations and Warranties.
Notwithstanding anything herein to the contrary, (i) all representations set
forth in Article 4 hereof shall be deemed to contain an exception for any
nonassignment provisions (including the effect of any failure to obtain a waiver
or consent) triggered in connection with the transactions contemplated hereby,
and (ii) all representations set forth in Article 6 hereof shall be deemed to
contain exceptions (x) with respect to the effect of any nonassignment or change
of control provisions (including the effect of any failure to obtain a waiver or
consent) triggered in connection with the transactions contemplated hereby and
(y) for the effect of the transactions contemplated by the MOU (including,
without limitation, terminations of affiliation agreement as a result of change
in control or nonassignment provisions), failure to launch the Box Service in
additional systems as a result of MTVN's failure to consent to the payment of
launch fees or failure of Box or SonicNet to take any action which requires
MTVN's consent pursuant to the MOU where such consent is not granted.
8.17 Obligations of TCI Music and Liberty. The obligations of
TCI Music and Liberty hereunder are several and not joint.
59
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective officers thereunto duly authorized on
the date first above written.
LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Sr. Vice President
TCI MUSIC, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
VIACOM INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
and General Counsel
MTVN ONLINE PARTNER I LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President,
General Counsel and
Assistant Secretary
IMAGINE RADIO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President,
General Counsel and
Assistant Secretary
60
MTVN ONLINE INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President,
General Counsel and
Assistant Secretary
SONICNET, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
THE BOX WORLDWIDE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
VJN LPTV CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
MTVN ONLINE L.P.
By: MTVN ONLINE PARTNER I LLC,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President,
General Counsel and
Assistant Secretary
