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EXHIBIT 2
AGREEMENT DATED AS OF DECEMBER 22, 2000, BETWEEN LIBERTY MEDIA CORPORATION
("LIBERTY") AND LIBERTY LIVEWIRE CORPORATION ("LIVEWIRE").
RECITALS
A. On July 25, 2000, Liberty, Livewire, AT&T Corp. ("PARENT"), E-Group Merger
Corp., a wholly-owned subsidiary of Parent, and Video Services Corporation
("VSC") entered into an Agreement and Plan of Merger (the "MERGER
AGREEMENT"). The Merger Agreement provides for the merger (the "MERGER") of
E-Group Merger Corp. with and into VSC, with VSC surviving.
B. In the Merger, each share of VSC common stock outstanding at the effective
time shall be converted into the right to receive 0.104 shares of LMGA PLUS
$2.75 in cash, in a taxable transaction.
C. As a result of the Merger and the Post-Merger Restructuring Transactions
contemplated by (and as defined in) the Merger Agreement (the
"RESTRUCTURING TRANSACTIONS"), Parent will acquire, and subject to certain
conditions immediately transfer to Liberty, 100% of the outstanding capital
stock of VSC. As used herein, the term "VSC EQUITY" means 100% of the
capital stock of VSC acquired by Liberty as a result of the Merger and the
Restructuring Transactions.
D. Liberty and Livewire are parties to a First Amended and Restated Credit
Agreement dated as of December 22, 2000 (the "Credit Agreement"), pursuant
to which Liberty has agreed to make subordinated convertible loans to
Livewire on the terms and subject to the conditions set forth therein.
E. As soon as practicable following the Merger and the Restructuring
Transactions, Liberty will contribute the VSC Equity to Livewire (the "VSC
CONTRIBUTION") in exchange for a convertible subordinated promissory note
under the Credit Agreement in principal amount equal to the Agreed
Consideration. As a result of the VSC Contribution, VSC will become a
wholly-owned subsidiary of Livewire.
F. The Merger Agreement provides that options to purchase shares of VSC Common
Stock under a VSC stock option plan or otherwise ("VSC Stock Options") will
be treated as follows:
- VSC Stock Options granted pursuant to the Video Services Corporation
1997 Long Term Incentive Plan shall be accelerated and terminated at
the effective time of the Merger unless exercised prior thereto;
- Each VSC Stock Option granted pursuant to (i) the International Post
Limited 1993 Long Term Incentive Plan (the "1993 Plan") and (ii) the
Stock
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Option Agreement dated as of February 15, 1994, between International
Post Limited (formerly, International Post Group, Inc.) and Jeffrey J.
Kaplan (the "Kaplan Option") shall be accelerated and converted into
an option to purchase a number of shares of LMGA equal to the number
of shares of VSC Common Stock formerly subject to such option, TIMES
0.208; and
- VSC will use its reasonable best efforts to persuade each person
holding a VSC Stock Option issued pursuant to the 1993 Plan to
exercise such option prior to the effective time of the Merger.
G. The VSC Stock Options are (and the Carryover Options shall remain)
contractual obligations of VSC.
H. In consideration of the VSC Contribution, the payment of the Agreed
Consideration and the other covenants and agreements set forth herein,
Liberty has agreed to provide Livewire with the additional funding provided
for in Article III of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be bound hereby, the parties to this
Agreement HEREBY AGREE AS FOLLOWS:
ARTICLE I. CERTAIN DEFINITIONS. As used herein, the following terms have
the corresponding meanings:
1.1. "AGREED CONSIDERATION" means the sum of the following:
(a) the VSC Outstanding Share Number, TIMES $2.75; PLUS
(b) the VSC Outstanding Share Number, TIMES 0.104, TIMES the
LMGA Average Closing Price.
1.2. "CARRYOVER OPTIONS" means any and all stock options (which,
immediately prior to the effective time of the Merger are exercisable for shares
of VSC Common Stock, and from and after the effective time of the Merger are
exercisable for shares of LMGA) under the 1993 Plan or the Kaplan Option, as
such options are in effect immediately after the effective time of the Merger.
1.3. "LIABILITIES" means any and all liabilities, obligations, losses,
damages, costs, expenses, claims, actions and causes of action whatsoever,
whether known or unknown, matured or unmatured, fixed or contingent.
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1.4. "LMGA" means the Class A Liberty Media Group Common Stock, par value
$1.00 per share, of Parent. If Parent redeems the LMGA prior to the Merger in
connection with a split-off of the Liberty Media Group or similar transaction,
LMGA shall mean and refer to the class or series and number of shares of capital
stock issued in exchange for each share of LMGA in such transaction.
1.5. "LMGA AVERAGE CLOSING PRICE" means the average of the closing market
price per share, as of 4:00 p.m. New York City time, of shares of LMGA, on The
New York Stock Exchange on each of (i) the day of the Merger, (ii) the business
day immediately preceding the day of the Merger, and (iii) the business day
immediately following the day of the Merger.
1.6. "VSC COMMON STOCK" means the common stock, par value $.01 per share,
of VSC, as in effect immediately prior to the effective time of the Merger.
1.7. "VSC OUTSTANDING SHARE NUMBER" means the number of shares of VSC
Common Stock outstanding immediately prior to the effective time of the Merger,
including without limitation any shares of VSC Common Stock deemed to be
outstanding immediately prior to the effective time of the Merger as a result of
the exercise or deemed exercise of any VSC Stock Options at or prior to the
closing of the Merger pursuant to Section 2.3(b) or Section 7.4(j) of the Merger
Agreement.
ARTICLE II. VSC CONTRIBUTION.
2.1. CONTRIBUTION. As soon as practicable following the Merger and the
Restructuring Transactions, Liberty shall contribute to Livewire the VSC Equity,
in exchange for the Agreed Consideration.
2.2. CONSIDERATION. The Agreed Consideration will be payable in full at the
closing of the VSC Contribution, by delivery of Livewire's convertible
subordinated promissory note under the Credit Agreement.
2.3. OUTSTANDING VSC INDEBTEDNESS AND OPTIONS. Liberty shall not be liable
for any indebtedness or other obligations of VSC whatsoever, including without
limitation any obligation under or in respect of any VSC Stock Options or
(except for the funding obligation expressly provided in Article III hereof) any
Carryover Options.
ARTICLE III. CARRYOVER OPTIONS.
The Carryover Options shall be obligations of VSC, and VSC (or Livewire)
shall be entitled to retain any and all exercise prices and/or other amounts
paid upon the exercise of any Carryover Option. VSC shall be solely responsible
for
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any and all payroll, withholding or other taxes relating to any exercise of
Carryover Options. Nothing in this Agreement shall give any holder of a
Carryover Option any rights against Liberty whatsoever.
ARTICLE IV. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS.
4.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LIBERTY. Liberty hereby
represents, warrants and covenants to Livewire that this Agreement has been duly
executed and delivered by Liberty. Liberty has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder
and consummate the transactions contemplated hereby. The execution and delivery
by Liberty of this Agreement and the performance by Liberty of its obligations
hereunder have been duly and validly authorized by all necessary corporate
action on its part. This Agreement is a legal, valid and binding obligation of
Liberty, enforceable in accordance with its terms.
4.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LIVEWIRE. Livewire hereby
represents, warrants and covenants to Liberty that this Agreement has been duly
executed and delivered by Livewire. Livewire has all requisite corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. The execution and
delivery by Livewire of this Agreement and the performance by Livewire of its
obligations hereunder have been duly and validly authorized by all necessary
corporate action on its part. This Agreement is a legal, valid and binding
obligation of Livewire, enforceable in accordance with its terms.
4.3. FURTHER ASSURANCES. If at or at any time after the closing of the VSC
Contribution, either party considers or is advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in Livewire the VSC
Equity, or otherwise to carry out the intent and purposes of this Agreement,
then, at the request of either party, each party shall execute and deliver (or
cause to be executed and delivered), all such deeds, bills of sale, assignments
and assurances and shall take and do all such other acts and things as either
party may determine to be necessary or desirable to vest, perfect or confirm any
and all rights, title and interests in, to and under the VSC Equity, and
otherwise to carry out the intents and purposes of this Agreement.
ARTICLE V. CONDITIONS.
The respective obligations hereunder of Liberty and Livewire to consummate
the VSC Contribution are in each case subject to the satisfaction on the closing
date of each of the following conditions:
5.1. ABSENCE OF INJUNCTIONS AND PROCEEDINGS. No permanent or preliminary
injunction or restraining order or other order by any court or other
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governmental entity of competent jurisdiction or other legal restraint or
prohibition shall be in effect, (i) preventing consummation of any of the
transactions contemplated hereby as provided herein, or permitting such
consummation only subject to any condition or restriction that has had or could
have a material adverse effect on the business, operations, results of
operations, financial condition, or prospects of Liberty, Livewire, VSC or any
direct or indirect subsidiary of any of them or of any other affiliate of
Liberty, (ii) requiring the divestiture, as a result of any of the transactions
contemplated hereby, of any substantial portion of the business or assets of
Liberty, Livewire, VSC or of any direct or indirect subsidiary of any of them or
of any other affiliate of Liberty, (iii) imposing material limitations on the
ability of Liberty (directly or, in the case of indirectly owned securities,
indirectly) effectively to exercise full rights of ownership of shares of
capital stock or other ownership interests of Livewire, VSC or any other direct
or indirect subsidiary of Liberty (including the right to vote such shares or
other ownership interests on all matters properly presented to the shareholders
or other equity holders of such entity) or making the holding by Liberty (or a
direct or indirect subsidiary of Liberty) of any such shares or other ownership
interests illegal or subject to any materially burdensome requirement or
condition, or (iv) requiring Liberty, Livewire, VSC or any direct or indirect
subsidiary of any of them or any other affiliate of Liberty to cease or refrain
from engaging in any line of business, as a result of this Agreement or any
transaction contemplated hereby.
5.2. NO ADVERSE ENACTMENTS. No statute, rule, regulation, law, order,
judgment or decree enacted, promulgated, entered, issued, enforced or deemed
applicable by any foreign or U.S. federal, state or local court or other
governmental authority of competent jurisdiction shall be in effect that (i)
makes this Agreement, the VSC Contribution or any other transaction contemplated
hereby illegal or imposes or is reasonably likely to impose material damages or
penalties in connection therewith or otherwise prohibits or unreasonably delays
any such transaction, (ii) requires or is reasonably likely to require, as a
result of the consummation of the VSC Contribution or any other transaction
contemplated hereby, the divestiture of or any restrictions or conditions on the
conduct of any substantial portion of the business or assets of Liberty,
Livewire, VSC or any direct or indirect subsidiary of any of them or of any
other affiliate of Liberty, (iii) imposes or is reasonably likely to result in
imposition of material limitations on the ability of Liberty (directly or, in
the case of indirectly owned securities, indirectly) effectively to exercise
full rights of ownership of shares of capital stock or other ownership interests
of Livewire, VSC or any other direct or indirect subsidiary of Liberty
(including the right to vote such shares or other ownership interests on all
matters properly presented to the shareholders or other equity holders of such
entities), or makes the holding by Liberty (or a direct or indirect subsidiary
of Liberty) of any such shares or other ownership interests illegal or subject
to any materially burdensome requirement or condition, or (iv) requires or is
reasonably likely to require Liberty, Livewire, VSC or any direct or indirect
subsidiary of any of them or any other affiliate of Liberty to cease or
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refrain from engaging in any material business, as a result of this Agreement or
the consummation of any transaction contemplated hereby.
5.3. TAX MATTERS. There shall not have been any change in law or
regulation, and no new decision, regulation or interpretation published by the
Internal Revenue Service or any other governmental authority of competent
jurisdiction after the date of this Agreement, that could reasonably be
anticipated to make the VSC Contribution taxable to Liberty or Livewire (or any
member of a consolidated group of which Liberty or LIvewire is a member) for
U.S. federal income tax purposes.
5.4. REGISTRATION RIGHTS AGREEMENT. Liberty and Livewire shall have entered
into a Registration Rights Agreement in substantially the form attached to this
Agreement as Annex A, and such agreement shall be in full force and effect.
ARTICLE VI. INDEMNIFICATION.
6.1. ALLOCATION OF LIABILITIES. All Liabilities related to or arising out
of the business or operations of VSC, the Merger Agreement, the Merger, the VSC
Contribution, the ownership of the VSC Equity by Liberty or Livewire, the VSC
Stock Options and Carryover Options or any modification or termination thereof,
or otherwise related to or arising out of this Agreement or any transactions
contemplated hereby shall, as between Liberty and Livewire, be Liabilities of
Livewire (collectively, "Livewire Liabilities"), except as provided in the
immediately following sentence. Notwithstanding the foregoing, as between
Liberty and Livewire, Liberty shall be responsible for (i) its obligations under
this Agreement, (ii) any Liabilities resulting from a breach of this Agreement
by Liberty and (iii) any Liabilities to the extent arising out of or relating to
any untrue or allegedly untrue statement of a material fact contained in or
incorporated by reference into the proxy statement/prospectus relating to the
Merger, the S-4 registration statement of which such proxy statement/prospectus
is a part, any other proxy materials provided to stockholders of VSC or filed
with the Securities and Exchange Commission in connection with the Merger or any
amendment thereto, or the omission or alleged omission to state or incorporate
by reference therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading, to the extent that such untrue or allegedly untrue
statement or omission or alleged omission relates to Liberty, the Liberty Media
Group (other than Livewire), AT&T or any member of the Common Stock Group
(collectively, "Liberty Liabilities").
6.2. LIVEWIRE INDEMNIFICATION. Livewire and VSC shall indemnify and defend
Liberty and hold Liberty harmless from and against any and all Livewire
Liabilities, including without limitation any Liabilities arising from or in
connection with (i) any Liabilities of VSC or (ii) any VSC Stock Options or
Carryover Options.
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6.3. LIBERTY INDEMNIFICATION. Liberty shall indemnify and defend Livewire
and VSC and hold Livewire and VSC harmless from and against any and all Liberty
Liabilities.
ARTICLE VII. TERMINATION.
If the Merger Agreement shall terminate for any reason in accordance with
Section 9.1 of the Merger Agreement, then either party shall have the right to
terminate this Agreement, effective on written notice of such termination to the
other party; PROVIDED, HOWEVER, that the party terminating this Agreement shall
not have been in breach of or default under the Merger Agreement at the time
that the Merger Agreement was terminated, and PROVIDED, FURTHER, that the
provisions of Articles VI and VIII of this Agreement shall survive any such
termination .
ARTICLE VIII. MISCELLANEOUS.
8.1. NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by
telegram or confirmed telex or telecopier, as follows:
(a) If to Liberty:
Liberty Media Corporation
9197 South Peoria Street
Englewood, CO 80112
Attention: General Counsel
Facsimile: (720) 875-5382
(b) If to Livewire:
Liberty Livewire Corporation
520 Broadway
Santa Monica, CA 90401
Attention: General Counsel
Facsimile: (310) 434-7005
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address shall be effective only upon actual receipt thereof.
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8.2. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral and written, between the parties with
respect to such subject matter.
8.3. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor any of
the rights, benefits or obligations hereunder may be assigned by any party
(whether by operation of law or otherwise) without the prior written consent of
the other party. Subject to the immediately preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
8.4. HEADINGS. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
8.5. COUNTERPARTS. This Agreement may be executed in counterparts, and on
separate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same agreement.
8.6. APPLICABLE LAW. This Agreement and the legal relations between the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed wholly
therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as ofthe date first above written.
LIBERTY LIVEWIRE CORPORATION
By: _________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By: _________________________
Name:
Title:
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