EXHIBIT 7(A)
SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is made as of the 11th day
of September, 1998, by and among ACTV, Inc., a Delaware corporation ("ACTV"),
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and Liberty
Media Corporation, a Delaware corporation (the "Investor"), located at ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. PURCHASE AND SALE OF STOCK.
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1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
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conditions of this Agreement, the Investor agrees to purchase and ACTV agrees to
sell and issue to the Investor (i) 2,500,000 shares (the "Shares") of ACTV's
Common Stock, $.10 par value (the "Common Stock"), and (ii) a Warrant (as
defined in Section 3.1) to purchase 2,500,000 shares of the Common Stock (the
"Warrant Shares"). The Shares, the Warrant and the Warrant Shares are referred
to in this Agreement as the "Securities."
1.2. PURCHASE PRICE. The price payable to ACTV by the Investor for
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the Shares and the Warrant purchased and sold pursuant to Section 1.1 hereof
shall be $5,000,000 (the "Purchase Price").
1.3 CLOSING. The closing for the purchase and sale of the Shares and
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the Warrant (the "Closing") shall take place on the fifth business day after the
execution of this Agreement at such time and place as the parties shall agree
or, if they cannot agree, at 11:00 a.m. local time at the address for ACTV set
forth above. At the Closing, ACTV shall deliver against delivery to ACTV by the
Investor of the Purchase Price by wire transfer to the account specified by
ACTV, in immediately available funds, a certificate in the name of the Investor
representing the Shares and the Warrant to Purchase Common Stock substantially
in the form attached as Exhibit A with such changes thereto as the parties agree
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upon (the "Warrant"), pursuant to which the Investor will have the right to
acquire 2,500,000 shares of ACTV's Common Stock at an exercise price of $2.00
per share exercisable for a period terminating ten years from the Closing. At
the Closing, (a) ACTV (or a subsidiary of ACTV) and the Investor (or a
subsidiary of the Investor) shall enter into an Operating Agreement
substantially in the form attached as Exhibit B with such changes thereto as the
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parties agree upon (the "LLC Agreement"), governing the rights and obligations
as a member of LMC/ACTV Events, LLC, a Delaware limited liability company (the
"LLC"), and (b) the LLC will enter into a Sub-License Agreement with ACTV
Entertainment, Inc., a wholly owned subsidiary of ACTV, substantially in the
form attached as Exhibit C with such changes thereto as the parties agree upon
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(the "Sub-License Agreement").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACTV. ACTV hereby
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represents, warrants and covenants to the Investor that, as of the date of this
Agreement and as of the Closing:
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2.1 ORGANIZATION AND GOOD STANDING. ACTV and each of its
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subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority under its Certificate (or Articles) of
Incorporation and Bylaws to own and operate its properties and assets and to
carry on its business as now conducted. ACTV and each subsidiary of ACTV is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on the
business, properties or financial condition of ACTV and its subsidiaries, taken
as a whole.
2.2 AUTHORIZATION. ACTV and each of its subsidiaries has the
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corporate power and authority to execute, deliver and perform this Agreement and
the Warrant, the LLC Agreement, the Sub-License Agreement, and the other
instruments and agreements contemplated by this Agreement (the "Additional
Agreements"), to the extent ACTV or such subsidiary is a party thereto, and ACTV
has the corporate power and authority to issue and sell the Securities. The
execution, delivery and performance of this Agreement and the Additional
Agreements by ACTV or one or more of its subsidiaries, as appropriate, and the
issuance and delivery of the Securities have been duly authorized by all
necessary corporate actions. This Agreement and each of the Additional
Agreements constitutes a valid and legally binding obligation of ACTV, or each
subsidiary of ACTV that is a party thereto, as appropriate, enforceable against
ACTV or such subsidiary in accordance with its terms, except as such may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of equity.
2.3 VALID ISSUANCE OF SHARES. The Securities, when issued, sold and
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delivered in accordance with the terms hereof and the terms of the Warrant with
respect to the Warrant Shares, will be duly and validly issued, fully paid and
nonassessable, and will not be subject to restrictions on transfer arising
through ACTV other than under applicable state and federal securities laws.
2.4 GOVERNMENTAL CONSENTS. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of ACTV or any of its subsidiaries in connection with the valid
execution, delivery or performance of this Agreement or any of the Additional
Agreements by ACTV or any of its subsidiaries that is a party thereto and the
issuance and sale of the Securities, except for any filings under any applicable
state securities laws. The filings under state securities laws, if any, will be
effected by ACTV at its cost within the applicable stipulated statutory period
after the sale of the Securities hereunder.
2.5 LITIGATION. There is no action, suit, proceeding or
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investigation pending or currently threatened against ACTV or any of its
subsidiaries which questions the validity of this Agreement or any of the
Additional Agreements or the right of ACTV to enter into it or to consummate the
transactions contemplated hereby or thereby. There is no action, suit,
proceeding or investigation pending or currently threatened which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially adversely affect the
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business, properties, operations, financial condition, income or business
prospects of ACTV and its subsidiaries, taken as a whole.
2.6 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. The execution,
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delivery and performance of this Agreement and the Additional Agreements and the
consummation of the transactions contemplated therein will not result in any
violation of or constitute, with or without the passage of time and giving of
notice, either a default under any provision of ACTV's or any of its
subsidiaries' Certificate (or Articles) of Incorporation or Bylaws or of any
law, rule, regulation, instrument, judgment, order, writ, decree or contract or
any rule or regulation of the National Association of Securities Dealers, Inc.
or an event which results in the creation of any lien, charge or encumbrance
upon any assets of ACTV or any of its subsidiaries. Neither ACTV or any of
subsidiaries is in violation of its Certificate (or Articles) of Incorporation
or Bylaws. Neither ACTV nor any of its subsidiaries is in default in the
performance or observance of any provision of any instrument or contract to
which it is bound or to which it or any of its assets is subject, or in
violation of any law, order, rule, regulation, writ, injunction, or decree of
any government, governmental instrumentality, or court applicable to it, except
where such default or violation would not have a material adverse effect on the
business, properties, operations, financial condition, income or business
prospects of ACTV and its subsidiaries, taken as a whole.
2.7 DISCLOSURE. ACTV has made available to the Investor all public
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filings made by ACTV with the Securities and Exchange Commission ("SEC Filings")
including the audited financial statements of ACTV and its consolidated
subsidiaries for the years ending December 31, 1997, December 31, 1996 and
December 31, 1995 ("Financial Statements"). All filings required to be filed
with the Securities and Exchange Commission ("SEC") by ACTV have been made in a
timely manner. The SEC Filings (including all documents incorporated by
reference therein) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except, in the case of any SEC Filing, any statement or
omission therein which has been corrected or otherwise disclosed or updated in a
subsequent SEC Filing. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods indicated and with each other,
except as may be indicated therein, and fairly present the financial position of
ACTV as at the dates thereof and the results of its operations and statements of
cash flows for the periods then ended, subject to normal year-end adjustments
and recognizing that the results of operations for interim periods are not
necessarily indicative of ACTV's operations for any other interim period or full
fiscal year.
2.8. PERMITS. ACTV and each of its subsidiaries has all governmental
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franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties or financial condition
of ACTV and its subsidiaries, taken as a whole. Neither ACTV nor any of its
subsidiaries is in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
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2.9. CHANGE. Except as set forth in the SEC Filings, since December
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31, 1997 to the date hereof, there has not been:
(a) any material change in the assets, liabilities, financial
condition or operating results of ACTV from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse, (except that ACTV expects to
continue to incur substantial operating losses, which may be material);
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties or
financial condition of ACTV, (except that ACTV expects to continue to incur
substantial operating losses, which may be material);
(c) any waiver or compromise by ACTV of a material right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation owed or securing an obligation owned to
ACTV, except in the ordinary course of business and which is not material to the
business, properties or financial condition of ACTV and its subsidiaries, taken
as a whole;
(e) any material change to a material contract or arrangement by
which ACTV or any of its subsidiaries or any assets of ACTV or any of its
subsidiaries is bound or subject;
(f) any sale, assignment or transfer by ACTV or any of its
subsidiaries of any material patents, trademarks, copyrights, trade secrets or
other intangible assets for compensation which is less than fair value;
(g) any mortgage, pledge, transfer of a security interest in, or
lien, created by ACTV or any of its subsidiaries, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable; or
(h) any event or condition of any type that has materially and
adversely affected the business, properties or financial condition of ACTV and
its subsidiaries taken as a whole.
2.10. CAPITALIZATION; OPTIONS AND WARRANTS. The authorized capital
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stock of ACTV consists of 65,000,000 shares of Common Stock, par value $.10 per
share, and 1,000,000 shares of Preferred Stock, par value $.10 per share, of
which 120,000 has been designated Series A 7% Convertible Preferred. As of the
date hereof, 72,600 shares of Series A Convertible Preferred Stock, 185,449
shares of ACTV Holdings, Inc. exchangeable preferred stock, the warrants to
purchase exchangeable preferred stock as set forth on Schedule 2.10 hereto
(which Schedule identifies each warrant and the holder thereof and the number,
type and rights of such
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exchangeable preferred stock, and the number of shares of Common Stock which
would be issuable if such preferred stock were exchanged for Common Stock as of
the date hereof) and 23,674,565 shares of Common Stock are issued and
outstanding, and approximately 5,991,538 shares of Common Stock are issuable
upon conversion or exchange of such outstanding shares of Series A Convertible
Preferred and ACTV Holdings, Inc. exchangeable preferred stock (exclusive of any
ACTV Holdings, Inc. exchangeable preferred stock described on Schedule 2.10).
Except for outstanding options and warrants as described in the SEC Filings and
except for transactions contemplated by this Agreement, ACTV has not granted any
option, warrants, rights (including conversion or preemptive rights), or similar
right, to any person or entity to purchase or acquire any rights with respect to
any shares of capital stock of ACTV, other than (a) options to purchase
1,442,817 shares that were granted to employees under ACTV's existing incentive
stock option plan and (b) options and warrants to purchase 411,926 shares that
were granted to non-employees since the respective disclosures in ACTV's most
recent 10-K filed with the SEC.
2.11. TITLE TO ASSETS. ACTV or one or more of its subsidiaries has
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good and marketable title to all material property and assets reflected in the
Financial Statements. Except where the failure to do so would not have a
material adverse effect on the business, properties or financial condition of
ACTV and its subsidiaries, taken as a whole, ACTV occupies its leased properties
under valid and binding leases conforming to the description thereof.
2.12. INTELLECTUAL PROPERTY. ACTV (or one or more of its
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subsidiaries) owns or possesses adequate rights to use all of the patents,
patent rights, trade secrets, know-how, proprietary techniques, including
processes and substances, trademarks, service marks, trade names and copyrights
owned or used by it or which are necessary for the conduct of its business as
presently conducted, except where the failure to own or possess such trade
secrets, service marks, trade names and copyrights would not have a material
adverse effect on the business, properties, operations, condition or income of
ACTV and its subsidiaries, taken as a whole. Neither ACTV nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent rights, trade
secrets, know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names and copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially adversely affect the business, properties, operations, financial
condition, income or business prospects of ACTV and its subsidiaries, taken as a
whole. ACTV or ACTV Entertainment, Inc. owns the ITP Rights (as defined in the
Sub-License Agreement), and neither ACTV nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to the ITP Rights.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR. The
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Investor hereby represents, warrants and covenants to ACTV that, as of the date
of this Agreement and as of the Closing:
3.1. AUTHORIZATION. The Investor and any subsidiary which
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executes any Additional Agreement has the corporate power and authority to
execute, deliver and perform this Agreement and the Additional Agreements and to
deliver the Purchase Price upon the Closing
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hereof. The execution, delivery and performance of this Agreement and the
Additional Agreements by the Investor and such subsidiary, as appropriate, and
the delivery of the Purchase Price for the Shares and Warrant have been duly
authorized by all necessary corporate action. This Agreement and each of the
Additional Agreements to which the Investor or such subsidiary is a party
constitutes a valid and legally binding obligation of the Investor or such
subsidiary, as the case may be, enforceable against the Investor in accordance
with its terms, except as such may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and by
general principles of equity.
3.2. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
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the Investor in reliance upon the Investor's representation to ACTV, which by
the Investor's execution of this Agreement the Investor hereby confirms, that
the Securities will be acquired for the Investor's own account, not as a nominee
or agent, and not with a view to the sale or distribution of any part thereof,
and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same except in compliance with
the registration requirements of the Securities Act of 1933, as amended, (the
"1933 Act"). By executing this Agreement, the Investor further represents that
the Investor does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant a participation to such person or to
any third person with respect to any Securities. The Investor shall not transfer
any Securities unless (i) such transfer is pursuant to an effective registration
statement under the 1933 Act, and the rules and regulations in effect thereunder
or (ii) ACTV shall have been furnished with an opinion of counsel for Investor,
reasonably satisfactory in form and substance to ACTV, that no such registration
is required because of the availability of an exemption from registration under
the 1933 Act.
3.3. DISCLOSURE OF INFORMATION. The Investor believes it has
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received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities. The Investor further represents that it has
had an opportunity to ask questions and receive answers from ACTV regarding the
terms and conditions of the offering of the Securities. The foregoing, however,
does not limit or modify the representations and warranties of ACTV in Section 2
hereof or the right of the Investor to rely thereon.
3.4. INVESTMENT EXPERIENCE. The Investor acknowledges that it can
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bear the economic risk of its investment and has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. The Investor also represents it has
not been organized for the purpose of acquiring the Securities.
3.5 ACCREDITED INVESTOR. The Investor is an "accredited investor"
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within the meaning of SEC Rule 501 of Regulation D promulgated under the ▇▇▇▇
▇▇▇.
3.6 RESTRICTED SECURITIES. The Investor understands that the
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Securities are "restricted securities" under the federal securities laws and
that under such laws and applicable regulations such Securities may be resold
without registration under the 1933 Act only in certain limited circumstances.
In this connection, the Investor represents that it is familiar with SEC Rule
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144 promulgated under the 1933 Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Act. The
certificates representing the Shares and the Warrant Shares shall bear the
following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT AN EXEMPTION FROM
REGISTRATION FOR SUCH SALE, OFFER, TRANSFER, HYPOTHECATION OR OTHER
ASSIGNMENT IS AVAILABLE UNDER SUCH ACT.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING. The obligations
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of the Investor to ACTV at the Closing are subject to the fulfillment on or
before the Closing of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
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warranties of ACTV contained in Section 2 hereof shall be true on and as of the
Closing.
4.2 PERFORMANCE. ACTV shall have performed and complied with all
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agreements, obligations and conditions contained in this Agreement that are
required to be performed, or complied with, by it on or before the Closing.
4.3 DELIVERIES. The Investor shall have received from ACTV at or
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prior to Closing:
(a) a copy of the Certificate of Incorporation of ACTV, including
all amendments, certified by the appropriate official of ACTV's state of
incorporation, together with a certificate of good standing issued by the
appropriate official of ACTV's state of incorporation, both issued as of a date
not more than ten days before the date of the Closing;
(b) a copy of the Bylaws of ACTV, including all amendments,
certified by the President, any Vice President or the Secretary of ACTV to be a
true and complete copy as of the Closing;
(c) a copy of resolutions of the Board of Directors of ACTV
approving and authorizing the execution and delivery of this Agreement and the
Warrant, the issuance of the Shares and the Warrant Shares and the reservation
of shares for issuance upon exercise of the Warrant, certified by the President
or any Vice President of ACTV to be a true and complete copy of duly adopted
resolutions;
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(d) stock certificates in proper form representing the Shares to
be issued at the Closing and the Warrant to be issued at the Closing, in each
case duly executed by ACTV;
(e) a certificate dated the date of the Closing signed by the
President or any Vice President of ACTV stating that the conditions specified in
this Section 4 are satisfied;
(f) the Sub-License Agreement, duly executed by ACTV and ACTV
Entertainment, Inc., as licensor; and
(g) the LLC Agreement, duly executed by ACTV or a subsidiary of
ACTV.
ACTV will use commercially reasonable efforts to cause all the conditions stated
in this Section to be satisfied at or before the date set for the Closing,
except only such conditions as may have been waived by the Investor. The
conditions stated in this Section are provided solely for the benefit of the
Investor and may be waived only by the Investor. Any waiver will be effective
only if stated expressly in writing by the Investor.
5. CONDITIONS OF ACTV'S OBLIGATIONS AT THE CLOSING. The obligations of
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ACTV to the Investor at the closing are subject to the fulfillment on or before
the Closing of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
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warranties of the Investor contained in Section 3 hereof shall be true on and as
of the Closing.
5.2 DELIVERIES. ACTV shall have received from the Investor:
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(a) the Purchase Price for the Securities;
(b) the Sub-License Agreement, duly executed by the LLC; and
(c) The LLC Agreement, duly executed by the Investor or a
subsidiary of the Investor.
The Investor will use commercially reasonable efforts to cause all the
conditions stated in this Section to be satisfied at or before the date set for
the Closing, except only such conditions as may have been waived by ACTV. The
conditions stated in this Section are provided solely for the benefit of ACTV
and may be waived only by ACTV. Any waiver will be effective only if stated
expressly in writing by ACTV.
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6. REGISTRATION RIGHTS.
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6.1 DEMAND REGISTRATION.
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(a) The Investor shall have the opportunity on three (3)
occasions to have ACTV register such of (i) the Shares , (ii) the Warrant Stock
(as defined in the Warrant) and (iii) any other Common Stock held by the
Investor (collectively the "Registrable Securities") as are specified in the
demand for registration delivered by the Investor to ACTV (the "Demand"), and
ACTV shall, as soon as practicable, but not later than 30 days after the date of
the Demand, file with the Securities and Exchange Commission (the "Commission")
a registration statement under the 1933 Act covering the registration thereunder
of the Registrable Securities specified in the Demand (the "Registration
Statement"). ACTV is required to exercise commercially reasonable efforts to
cause such Registration Statement to become effective. No securities other than
those specified in the Demand shall be included in such registration.
(b) If so requested by the Investor, the Registration
Statement shall provide for a delayed or continuous offering of Registrable
Securities pursuant to Rule 415 promulgated under the 1993 Act or any similar
rule then in effect. If so requested by the Investor, the public offering or
distribution of Registrable Securities under this Agreement shall be pursuant to
a firm commitment underwriting, the managing underwriter of which shall be a
recognized investment banking firm selected and engaged by the Investor and
approved by ACTV, which approval shall not be unreasonably withheld. ACTV shall
enter into the same underwriting agreement as shall the Investor, containing
representations, warranties and agreements not substantially different from
those customarily made by an issuer in underwriting agreements with respect to
secondary distributions. ACTV, as a condition to fulfilling its obligations
under this Section 6 may require the underwriters to enter into an agreement in
customary form indemnifying ACTV against any Losses (as defined in Section 6.2
hereof) that arise out of or are based upon an untrue statement or an alleged
untrue statement or omission or alleged omission in the Disclosure Documents (as
defined in Section 6.2 hereof) made in reliance upon and in conformity with
written information furnished to ACTV by the underwriters specifically for use
in the preparation thereof.
(c) The Investor may, before such a Registration Statement
becomes effective, withdraw its Registrable Securities from sale, should the
terms of sale not be reasonably satisfactory to such Investor; however, such
registration shall be deemed to have occurred for the purposes of Section 6.1(a)
hereof, unless the Investor pays within 20 days after any such withdrawal, all
of the out-of-pocket expenses of ACTV incurred in connection with such
registration.
(d) If and whenever ACTV is obligated by the provisions of
this Section 6 to effect the registration of any Registrable Securities under
the 1993 Act, ACTV shall:
(i) prepare and file with the Commission any amendments
and supplements to the Registration Statement and to the prospectus used in
connection therewith as
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may be necessary to keep the Registration Statement effective and to comply with
the provisions of the 1933 Act and the rules and regulations promulgated
thereunder with respect to the disposition of all Registrable Securities covered
by the Registration Statement for the period required to effect the distribution
of such Securities, but in no event shall ACTV be required to do so for a period
of more than 180 days following the effective date of the Registration
Statement;
(ii) notify the Investor and its underwriter, and
confirm such advice in writing, (A) when a Registration Statement becomes
effective, (B) when any post-effective amendment to a Registration Statement
becomes effective, and (C) of any request by the Commission for any amendment of
or supplement to a Registration Statement or any prospectus relating thereto or
for additional information:
(iii) furnish at ACTV's expense to the Investor such
number of copies of a preliminary, final, supplemental or amended prospectus, in
conformity with the requirements of the 1993 Act and the rules and regulations
promulgated thereunder, as may reasonably be required in order to facilitate the
disposition of the Registrable Securities covered by a Registration Statement,
but only while ACTV is required under the provisions hereof to cause a
Registration Statement to remain effective;
(iv) register or qualify the Registrable Securities
covered by a Registration Statement under such other securities or blue sky laws
of such jurisdictions in the United States as the Investor shall reasonably
request, and do any and all other acts and things which may be necessary to
enable the Investor to consummate the disposition in such jurisdictions of such
Securities; provided, however, that ACTV shall in no event be required to
qualify to do business as a foreign corporation or a dealer in any jurisdiction
where it is not so qualified, to conform the composition of its assets at the
time to the securities or blue sky laws of such jurisdiction, to execute or file
any general consent to service of process under the laws of any jurisdiction, to
take any action that would subject it to service of process in suits other than
those arising out of the offer and sale of the Registrable Securities covered by
the Registration Statement, or to subject itself to taxation in any jurisdiction
where it has not theretofore done so.
(e) ACTV's obligations under this Section 6.1 shall be
conditioned upon the Investor's compliance with the following:
(i) The Investor shall cooperate with ACTV in
connection with the preparation of the Registration Statement, and for so long
as ACTV is obligated to file and keep effective the Registration Statement,
shall provide to ACTV, in writing, for use in the Registration Statement, all
such information regarding the Investor and its plan of distribution of the
Registrable Securities as may be necessary to enable ACTV to prepare the
Registration Statement and prospectus covering the Registrable Securities, to
maintain the currency and effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith.
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(ii) During such time as the Investor may be engaged in
a distribution of the Registrable Securities, the Investor will comply with all
applicable provisions of state and federal securities laws, including Regulation
M promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(f) The Investor shall have no right to demand registration
under this Section 6 if all of the Registrable Securities are (i) freely
tradable in a single transaction under Rule 144(k) promulgated under the 1933
Act, as determined by an opinion of counsel reasonably satisfactory to the
Investor, or (ii) are then subject to an effective Registration Statement on
Form S-3 (or other applicable form) which ACTV may file at any time and which
may include securities other than the Registrable Securities.
(g) All expenses incurred in any registration of the
Registrable Securities under this Agreement shall be paid by ACTV, including,
without limitation, printing expenses, fees and disbursements of counsel for
ACTV, expenses of any audits which shall be necessary to comply with
governmental requirements in connection with any such registration, all
registration and filing fees for the Registrable Securities under federal and
state securities laws, and expenses of complying with the securities or blue sky
laws of any jurisdictions; provided, however, ACTV shall not be liable for (i)
any discounts or commissions to any underwriter with respect to the Registrable
Securities; (ii) any stock transfer taxes incurred with respect to Registrable
Securities sold in such offering or (iii) the fees and expenses of counsel for
Investor.
6.2 INDEMNIFICATION. In the event any Registrable Securities are
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included in a Registration Statement under this Section 6:
(a) To the extent permitted by law, ACTV will indemnify and
hold harmless the Investor, any underwriter (as defined in the ▇▇▇▇ ▇▇▇) for the
Investor and each other person, if any, who controls the Investor or such
underwriter within the meaning of Section 15 of the 1933 Act, against any
losses, claims, damages, or liabilities, joint or several, or actions in respect
thereof ("Losses"), to which such indemnified party may become subject under the
1933 Act, the Exchange Act, any other federal or state law or otherwise, insofar
as such Losses arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact contained in such Registration
Statement, including any preliminary prospectus (if used prior to the effective
date of such Registration Statement) or final prospectus contained therein or in
any post-effective amendments or supplements thereto (if used during the period
ACTV is required to keep the Registration Statement effective) (the "Disclosure
Documents"), (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by ACTV of the 1933
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or any state securities law
committed by ACTV in connection with the performance of its obligations under
Section 6.1; and ACTV will reimburse each such indemnified party for all legal
or other expenses reasonably incurred by such party in connection with
investigating or defending any such claims, including, subject to such
indemnified party's compliance with the provisions of the last sentence of
subsection (c) of this Section 6.2, any
21
amounts paid in settlement of any litigation, commenced or threatened; provided,
however, that ACTV shall not be liable to an indemnified party in any such case
to the extent that any such Losses arise out of or are based upon (A) an untrue
statement or alleged untrue statement or omission or alleged omission (1) made
in any such Disclosure Documents in reliance upon and in conformity with written
information furnished to ACTV by or on behalf of such indemnified party
specifically for use in the preparation thereof, or (2) made in any preliminary
or summary prospectus if a copy of the final prospectus was not delivered to the
person alleging any loss, claim, damage or liability for which Losses arise at
or prior to the written confirmation of the sale of such Registrable Shares to
such person and the untrue statement or omission concerned had been corrected in
such final prospectus or (3) made in any prospectus used by such indemnified
party if a court of competent jurisdiction finally determines that at the time
of such use such indemnified party had actual knowledge of such untrue statement
or omission; or (B) the use of any prospectus after such time as ACTV has
advised such indemnified party in writing that the filing of a post-effective
amendment or supplement thereto is required, except the prospectus as so amended
or supplemented, or the use of any prospectus after such time as the obligation
of ACTV to keep the same current and effective has expired.
(b) To the extent permitted by law, the Investor will
indemnify and hold harmless ACTV, each of its directors, each of its officers
who has signed the Registration Statement, and each person, if any, who controls
ACTV within the meaning of Section 15 of the 1933 Act, against any Losses, joint
or several, to which any of the foregoing persons may become subject, under the
1933 Act, the Exchange Act or other federal or state law, insofar as such Losses
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any of the Disclosure Documents or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements made therein not misleading, if the statement or omission was in
reliance upon and in conformity with written information furnished to ACTV by
such indemnifying party (defined below) specifically for use in the preparation
thereof; (ii) the use by such indemnifying party of any prospectus after such
time as ACTV has advised such indemnifying party in writing that the filing of a
post-effective amendment or supplement thereto is required, except the
prospectus as so amended or supplemented, or after such time as the obligation
of ACTV to keep the Registration Statement effective and current has expired, or
(iii) any violation by such indemnifying party of its obligations under Section
6.1(e) hereof; and will reimburse each such indemnified party for all legal or
other expenses reasonably incurred by such party in connection with
investigating or defending any such claim, including, subject to such
indemnified party's compliance with the provisions of the last sentence of
subsection (c) of this Section 6.2, any amounts paid in settlement of any
litigation, commenced or threatened.
(c) Promptly after the receipt by any party hereto of notice
of any claim, action, suit or proceeding by any person who is not a party to
this Agreement (collectively, an "Action") which is subject to indemnification
hereunder, such party (the "Indemnified Party") shall give reasonable written
notice to the party from whom indemnification is claimed (the "Indemnifying
Party"). The Indemnified Party shall be entitled, at the sole expense and
liability of the Indemnifying Party, to exercise full control of the defense,
compromise or settlement of any
22
such Action unless the Indemnifying Party, within a reasonable time after the
giving of such notice by the Indemnified Party, shall: (i) admit in writing to
the Indemnified Party, the Indemnifying Party's liability to the Indemnified
Party for such Action under the terms of this Section 6.2, (ii) notify the
Indemnified Party in writing of the Indemnifying Party's intention to assume the
defense thereof, and (iii) retain legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The Indemnified Party
and the Indemnifying Party shall cooperate with the party assuming the defense,
compromise or settlement of any such Action in accordance herewith in any manner
that such party reasonably may request. If the Indemnifying Party so assumes the
defense of any such Action, the Indemnified Party shall have the right to employ
separate counsel and to participate in (but not control) the defense, compromise
or settlement thereof, but the fees and expenses of such counsel shall be the
expense of the Indemnified Party unless (i) the Indemnifying Party has agreed to
pay such fees and expense, (ii) any relief other than the payment of money
damages is sought against the Indemnified Party or (iii) the Indemnified Party
shall have been advised by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case the fees and expenses
of such separate counsel shall be borne by the Indemnifying Party. No
Indemnifying Party shall settle or compromise any such Action in which any
relief other than the payment of money damages is sought against any Indemnified
Party unless the Indemnified Party consents in writing to such compromise or
settlement. No Indemnified Party shall settle or compromise any such Action for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, unless the Indemnifying Party shall have
failed, after reasonable notice thereof, to undertake control of such Action in
the manner provided above in this Section 6.2(c).
(d) If the indemnification provided for in subsections (a) or
(b) of this Section 6.2 is unavailable to or insufficient to hold the
indemnified party harmless under subsections (a) or (b) above in respect of any
Losses referred to therein for any reason other than as specified therein, then
the indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and such indemnified party on the other in connection with the statements
or omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) ACTV or the
Investor (or underwriter) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the Losses
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
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(e) The obligations of ACTV and the Investor under this
Section 6.2 shall survive the completion of any offering of the Registrable
Securities in a Registration Statement under this Section 6, and otherwise.
7. NOMINATION AND ELECTION OF DIRECTOR. So long as the Investor owns, in
-----------------------------------
its own name or in the name of one or more subsidiaries, at least 10% of the
outstanding shares of Common Stock of ACTV, and thereafter so long as the
Investor owns, in its own name or in the name of one or more subsidiaries, at
least 5% of the outstanding shares of Common Stock of ACTV and the shares of
Common Stock so owned number at least 2,500,000, the Investor shall have the
right upon request to have its designee nominated to the Board of Directors of
ACTV. ACTV shall take use reasonable efforts to cause the Investor's designee
to be nominated and elected to the Board of Directors, including, but not
limited to, expansion of the number of directors on the Board.
8. MISCELLANEOUS.
--------------
8.1 SURVIVAL OF WARRANTIES. The warranties and representations of
----------------------
ACTV and the Investor contained in or made pursuant to this Agreement shall
survive the Closing until the second anniversary of the date of the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investor or ACTV. The period of survival of the
representations and warranties prescribed by this Section 8.1 are referred to as
the "Survival Period." The liabilities of the parties under their respective
representations and warranties will expire as of the expiration of the Survival
Period; provided, however, that such expiration will not include, extend or
apply to any representation or warranty, the breach of which has been asserted
by ACTV or the Investor, as the case may be, in a written notice before such
expiration indicating that facts or conditions exist that, with the passage of
time or otherwise, can reasonably be expected to result in a breach (and
describing such potential breach in reasonable detail).
8.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement, other than rights conferred upon indemnified persons under
Section 6.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed
-------------
under the internal laws of the State of New York.
8.4 COUNTERPARTS. This Agreement shall become binding when any one
------------
or more counterparts hereof, individually or taken together, shall bear the
signatures of the parties. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, but all of which together shall constitute one
and the same instrument.
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8.5 TITLES AND SUBTITLES. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 NOTICES. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be in writing and shall be made by personal
delivery to the party to be notified, by reputable overnight courier, with
acknowledgment of receipt, upon facsimile to the number indicated on the
signature page hereof or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days, advance
written notice to the other parties. Any such notice shall be effective upon
the sending of such notice except that any notice given by facsimile
transmission shall be deemed effective upon receipt.
8.7 FINDERS' FEE. Each party agrees to indemnify and to hold
------------
harmless the other party from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which the indemnifying party or any of
its officers, partners, employees, or representatives is responsible.
8.8 EXPENSES. Each party shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
8.9 PUBLICITY. The parties shall cooperate in determining the
---------
format, date and time of day of the announcement of the execution and terms of
this Agreement, giving consideration to the requirements of all applicable laws
and regulations. Each party may disclose the existence of this Agreement and
its subject matter in order to comply, in the opinion of such party's counsel,
with applicable securities laws.
8.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively
but only if so expressly stated), only with the written consent of ACTV and the
Investor. Any amendment or waiver effected in accordance with this Section 8.10
shall be binding upon each party and its permitted assigns.
8.11 SEVERABILITY. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
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[Signatures on following page]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ACTV, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
26
