<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 4, 1999
_________________
GEMSTAR INTERNATIONAL GROUP LIMITED
(Exact Name of Registrant as Specified in Charter)
British Virgin Islands 0-26878 N/A
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
135 North Los Robles Avenue,
Suite 800
Pasadena, California 91101
(Address of Principal Executive Offices
and Zip Code)
(626) 792-5700
Registrant's telephone number, including area code
N/A
(Former Name or Former Address, if Changed Since Last Report)
_________________
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS.
Merger Agreement. On October 4, 1999, Gemstar International Group Limited
----------------
("Gemstar") and TV Guide, Inc., a Delaware corporation ("TV Guide"), announced
that they had entered into an Agreement and Plan of Merger, dated as of October
4, 1999 (the "Merger Agreement"), by and among Gemstar, TV Guide and G
Acquisition Subsidiary Corp., a Delaware corporation and wholly owned subsidiary
of Gemstar ("Sub"), providing, upon the terms and subject to the conditions set
forth therein, for the acquisition of TV Guide by Gemstar through the merger of
Sub with and into TV Guide, with TV Guide being the surviving corporation (the
"Merger"). A copy of the Merger Agreement (including the form of certificate of
merger which will be used to effect the Merger) is attached hereto as Exhibit
99.1 and is hereby incorporated by reference herein.
Bylaws. Pursuant to the Merger Agreement, upon completion of the Merger,
------
the bylaws of Gemstar will be in the form set forth as Exhibit 99.2 hereto,
which is hereby incorporated by reference herein.
Voting Agreements. Simultaneously with the execution of the Merger
-----------------
Agreement, each of Henry C. Yuen ("Yuen"), Elsie Ma Leung ("Leung"), Dynamic
Core Holdings Limited ("Dynamic"), of which Thomas Lau (a director of Gemstar)
is the sole stockholder, and THOMSON multimedia S.A. ("Thomson") entered into a
voting agreement with TV Guide. Also simultaneously with the execution of the
Merger Agreement, each of Liberty Media Corporation ("Liberty") and The News
Corporation Limited ("News Corp.") and certain of their respective affiliates
entered into a voting agreement with Gemstar. Copies of the foregoing voting
agreements described in this paragraph (the "Voting Agreements") are attached
hereto as Exhibits 99.3 to 99.8 and are hereby incorporated by reference herein.
Stockholders Agreement. Simultaneously with the execution of the Merger
----------------------
Agreement, Yuen, Liberty, News Corp. and Gemstar entered into a stockholders
agreement (the "Stockholders Agreement"), which will become effective upon the
completion of the Merger. A copy of the Stockholders Agreement is attached
hereto as Exhibit 99.9 and is hereby incorporated by reference herein.
Yuen Amendment. Simultaneously with the execution of the Merger Agreement,
--------------
Yuen's existing employment agreement with Gemstar and its subsidiary was amended
(the "Yuen Amendment"). A copy of the Yuen Amendment is attached hereto as
Exhibit 99.10 and is hereby incorporated by reference herein.
Executive Employment Agreements. TV Guide has entered into employment
-------------------------------
agreements with each of Joachim Kiener ("Kiener") and Peter C. Boylan III
("Boylan"), which agreements will be assumed by Gemstar in the Merger. A copy
of Kiener's employment agreement is attached hereto as Exhibit 99.11 and a copy
of Boylan's employment agreement is attached hereto as Exhibit 99.12, and each
is hereby incorporated by reference herein.
Cross Options. Simultaneously with the execution of the Merger Agreement,
-------------
each of Gemstar and TV Guide granted the other an option to purchase 14.9% of
its common stock. A copy of each option is attached hereto as Exhibits 99.13
and 99.14, and each is hereby incorporated by reference herein.
Amendments to Rights Agreement. Pursuant to the Merger Agreement, Gemstar
------------------------------
will make certain amendments (the "Rights Amendments") to its existing Rights
Agreement, dated July 10, 1998, between Gemstar and American Stock Transfer &
Trust Company. A copy of the Rights Amendments is attached hereto as Exhibit
99.15 and is hereby incorporated by reference herein.
Amendment to Merger Agreement. On February 7, 2000, Gemstar, Sub and TV
------------------------------
Guide entered into an Amendment (the "Merger Agreement Amendment") to the
Merger Agreement. The Merger Agreement Amendment sets forth the agreement of
the parties with respect to the forms of Gemstar's Certificate of Incorporation
and Bylaws following Gemstar's change in place of incorporation from the British
Virgin Islands to the State of Delaware and the completion of the Merger and
certain other matters. A copy of the Merger Agreement Amendment is attached
hereto as Exhibit 99.16 and is hereby incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
Exhibit No. Description
- ----------- -----------
99.1 Merger Agreement (including form of certificate of merger)
99.2 Form of Gemstar bylaws
99.3 Voting Agreement between Yuen and TV Guide (Incorporated by
reference to Exhibit 1 to Schedule 13D/A, filed January 5, 2000,
with respect to ownership of securities of
2
<PAGE>
Gemstar International Group Limited)
99.4 Voting Agreement between Leung and TV Guide
99.5 Voting Agreement between Dynamic and TV Guide (Incorporated by
reference to Exhibit 1 to Schedule 13D, filed January 5, 2000,
with respect to ownership of securities of Gemstar International
Group Limited)
99.6 Voting Agreement between Thomson and TV Guide
99.7 Voting Agreement among Liberty, certain of its controlled
affiliates and Gemstar (Incorporated by reference to Exhibit 7(i)
to Schedule 13D/A, filed November 4, 1999, with respect to
ownership of securities of TV Guide, Inc.)
99.8 Voting Agreement among News Corp., certain of its controlled
affiliates and Gemstar (Incorporated by reference to Exhibit 10.8
to Schedule 13D/A, filed November 4, 1999, with respect to
ownership of securities of TV Guide, Inc.)
99.9 Stockholders Agreement
99.10 Yuen Amendment
99.11 Employment agreement between TV Guide and Kiener
99.12 Employment agreement between TV Guide and Boylan
99.13 Option agreement between Gemstar and TV Guide with respect to
Gemstar stock
99.14 Option agreement between Gemstar and TV Guide with respect to
TV Guide stock
99.15 Rights Amendments
99.16 Merger Agreement Amendment
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 7, 2000
GEMSTAR INTERNATIONAL GROUP LIMITED
/s/ Stephen A. Weiswasser
____________________________________
Stephen A. Weiswasser
Executive Vice President
and General Counsel
4
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 Merger Agreement (including form of certificate of merger)
99.2 Form of Gemstar bylaws
99.3 Voting Agreement between Yuen and TV Guide (Incorporated by
reference to Exhibit 1 to Schedule 13D/A, filed January 5, 2000,
with respect to ownership of securities of Gemstar International
Group Limited)
99.4 Voting Agreement between Leung and TV Guide
99.5 Voting Agreement between Dynamic and TV Guide (Incorporated by
reference to Exhibit 1 to Schedule 13D/A, filed January 5, 2000,
with respect to ownership of securities of Gemstar International
Group Limited)
99.6 Voting Agreement between Thomson and TV Guide
99.7 Voting Agreement among Liberty, certain of its controlled
affiliates and Gemstar (Incorporated by reference to Exhibit 7(i)
to Schedule 13D/A, filed November 4, 1999, with respect to
ownership of securities of TV Guide, Inc.)
99.8 Voting Agreement among News Corp., certain of its controlled
affiliates and Gemstar (Incorporated by reference to Exhibit 10.8
to Schedule 13D/A, filed November 4, 1999, with respect to
ownership of securities of TV Guide, Inc.)
99.9 Stockholders Agreement
99.10 Yuen Amendment
99.11 Employment agreement between TV Guide and Kiener
99.12 Employment agreement between TV Guide and Boylan
99.13 Option agreement between Gemstar and TV Guide with respect to
Gemstar stock
99.14 Option agreement between Gemstar and TV Guide with respect to
TV Guide stock
99.15 Rights Amendments
99.16 Merger Agreement Amendment
5
<PAGE>
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of October
4, 1999 by and among Gemstar International Group Limited, a British Virgin
Islands corporation ("Parent"), G Acquisition Subsidiary Corp., a Delaware
corporation and a direct wholly owned subsidiary of Parent ("Sub"), and TV
Guide, Inc., a Delaware corporation (the "Company").
BACKGROUND
A. The respective Boards of Directors of Parent, Sub and the Company have
approved the merger of Sub with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), whereby each issued and outstanding share of the Company's Class A
common stock, $0.01 par value per share (the "Company Class A Common Stock")
and each issued and outstanding share of the Company's Class B common stock,
$0.01 par value (the "Company Class B Common Stock", and together with the
Company Class A Common Stock, the "Company Common Stock"), other than shares to
be cancelled in accordance with Section 2.1(b), will be converted into the
right to receive a certain number of ordinary shares, $0.01 par value per
share, of Parent ("Parent Common Stock", which term shall also include any
rights attached to such Parent Common Stock to purchase Parent's Series A
Junior Participating Preferred Shares), such number to be determined as
provided herein.
B. Pursuant to, and in accordance with, Regulation 127 of Parent's Amended
and Restated Articles of Association, as amended ("Parent's Articles"), Section
88 of the International Business Companies Act, 1984 (Cap. 291) of the British
Virgin Islands (the "IBCA"), and Section 388 of the DGCL, the Board of
Directors of Parent has approved the continuation and domestication of Parent
as a corporation organized and incorporated pursuant to the laws of the State
of Delaware, such domestication to be effective prior to the Effective Time (as
defined below) of the Merger, at which time Parent shall cease to be a
corporation organized and incorporated under the laws of the British Virgin
Islands, shall continue as a corporation organized and incorporated under the
laws of the State of Delaware with the Certificate of Incorporation in the form
attached hereto as Exhibit 1.7(a) and the Bylaws in the form attached hereto as
Exhibit 1.7(b) serving as the certificate of incorporation and bylaws of Parent
until amended in accordance with the terms thereof and the laws of the State of
Delaware (the "Domestication").
C. The Merger requires the approval of the holders of a majority of the
combined voting power of the outstanding shares of the Company Common Stock
voting together as a single class (the "Company Stockholder Approval").
D. The rules of the Nasdaq National Market require that the stockholders of
Parent ("Parent Stockholders") approve the issuance of the Parent Common Stock
pursuant to this Agreement by the affirmative vote of the holders of a majority
of the shares of Parent Common Stock voted at a meeting of Parent Stockholders
in person or by proxy and Parent will seek to obtain such approval of the
Parent Stockholders of the Domestication as is required by applicable law
(collectively, the "Parent Stockholder Approvals" and together with the Company
Stockholder Approval, the "Stockholder Approvals").
E. Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
F. For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
A-1
<PAGE>
G. Concurrently with the execution of this Agreement and as an inducement to
Parent to enter into this Agreement, each of Liberty Media Corporation
("Liberty") and The News Corporation Limited ("News Corp."), each an indirect
stockholder of the Company (the "Company Significant Stockholders"), has
entered into an agreement with Parent (the "Company Voting Agreements"), in the
applicable form attached hereto as Exhibits A-1 through A-2, pursuant to which
the Company Significant Stockholders have, among other things, agreed (i) to
vote their shares of the Company Common Stock in favor of the Merger, and (ii)
to take certain other actions as provided therein.
H. Concurrently with the execution of this Agreement and as an inducement to
the Company to enter into this Agreement, each of Henry C. Yuen, Elsie Ma
Leung, Dynamic Core Holdings Limited and THOMSON multimedia, S.A., each a
stockholder of Parent (the "Parent Significant Stockholders"), has entered into
an agreement with the Company (the "Parent Voting Agreements"), in the
applicable form attached hereto as Exhibits B-1 through B-4, pursuant to which
each Parent Significant Stockholder has, among other things, agreed (i) to vote
their respective shares of Parent Common Stock in favor of the issuance of the
Parent Common Stock and the Domestication pursuant to this Agreement, and (ii)
to take certain other actions as provided therein.
I. Concurrently with the execution of this Agreement and as an inducement to
Parent to enter into this Agreement, the Company and Parent have entered into a
Company Option Agreement (the "Company Option Agreement") pursuant to which the
Company shall grant to Parent an option to purchase shares of Company Common
Stock as set forth in the Company Option Agreement.
J. Concurrently with the execution of this Agreement and as an inducement to
the Company to enter into this Agreement, the Company and Parent have entered
into a Parent Option Agreement (the "Parent Option Agreement") pursuant to
which Parent shall grant to the Company an option to purchase shares of Parent
Common Stock as set forth in the Parent Option Agreement.
A-2
<PAGE>
AGREEMENT
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
The Merger
Section 1.1 The Domestication of Parent. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with Regulation 127 of
Parent's Articles, Section 88 of the IBCA and Section 388 of the DGCL, prior to
the Effective Time of the Merger, Parent shall effect the Domestication.
Following the Domestication, Parent shall cease to be a corporation organized
pursuant to the laws of the British Virgin Islands.
Section 1.2 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as defined in Section 1.4).
Following the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
the Company and of Sub in accordance with the DGCL.
Section 1.3 Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.1, the closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties, which shall be no later than the
second business day after satisfaction or waiver of the conditions set forth in
Article VI (the "Closing Date"), at the offices of O'Melveny & Myers LLP, 610
Newport Center Drive, 17th Floor, Newport Beach, California, unless another
time, date or place is agreed to in writing by the parties hereto.
Section 1.4 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties hereto shall cause the
Merger to be consummated by filing a Certificate of Merger substantially in the
form of Exhibit 1.4 (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, executed in accordance with the relevant provisions
of the DGCL (the date and time of such filing, or such later date and time as
may be specified in the Certificate of Merger by mutual agreement of Parent,
Sub and the Company, being the "Effective Time").
Section 1.5 Effects of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of the Company
and Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 1.6 Certificate of Incorporation and Bylaws of Surviving
Corporation. The Certificate of Incorporation of the Sub in effect at the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with the terms thereof and the
DGCL; provided, however, that at the Effective Time the Certificate of
Incorporation of the Surviving Corporation shall be amended so that the name of
the Surviving Corporation shall be "TVG, Inc." or such other name as the
parties hereto may agree. The Bylaws of Sub in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
Section 1.7 Certificate of Incorporation and Bylaws of Parent. Following
the Domestication and at the Effective Time, the Certificate of Incorporation in
the form attached hereto as Exhibit 1.7(a) shall be the Certificate of
Incorporation of Parent and shall remain in effect until duly amended in
accordance with the terms thereof and the laws of the State of Delaware.
Following the Domestication and at the Effective Time, the Bylaws in the form
attached hereto as Exhibit 1.7(b) shall be the Bylaws of Parent (the "Bylaws of
A-3
<PAGE>
Parent") and shall remain in effect until duly amended in accordance with the
terms thereof and the laws of the State of Delaware.
Section 1.8 Directors. At the Effective Time, the directors of the Company
immediately prior to the Effective Time shall be deemed to have resigned at
such time and the persons whose names are set forth on Exhibit 1.8 shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified.
Section 1.9 Officers. At the Effective Time, the officers of the Company
immediately prior to the Effective Time shall continue to serve as the officers
of the Surviving Corporation until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified.
Section 1.10 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be 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 the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized, so long as such action is not in conflict with this Agreement, to
execute and deliver, in the name and on behalf of Sub or the Company, all such
deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf Sub or the Company, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Sub, the Company, or the
holders of any shares of the Company Common Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and nonassessable share
of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each share of
the Company Common Stock that is owned by the Company and each share of the
Company Common Stock that is owned by Parent or Sub immediately prior to
the Effective Time shall automatically be cancelled and retired without any
conversion thereof and no consideration shall be delivered with respect
thereto.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding as of the Effective Time, other than shares to
be cancelled in accordance with Section 2.1(b), shall be converted, subject
to Section 2.1(e) and 2.2(e), into .6573 shares (the "Exchange Ratio") of
Parent Common Stock (including all rights attached thereto). As of the
Effective Time, all such shares of the Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and the holders of certificates or instruments previously
evidencing such shares of the Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect
thereto except as otherwise provided herein or by law. Each certificate
previously representing the Company Common Stock shall thereafter represent
the right to receive a certificate representing the shares of Parent Common
Stock into which the Company Common Stock was converted in the Merger. Such
certificates previously representing shares of the Company Common Stock
shall be exchanged for certificates representing whole shares of Parent
Common Stock issued in
A-4
<PAGE>
consideration therefor upon the surrender of such certificates in
accordance with the provisions of Section 2.2, without interest. No
fractional shares of Parent Common Stock shall be issued, and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.2(e).
(d) Stock Options. At the Effective Time, all options to purchase the
Company Common Stock (each, a "Company Stock Option") then outstanding
under the TV Guide, Inc. Stock Option Plan for Non-Employee Directors and
the TV Guide, Inc. Equity Incentive Plan (collectively, the "Company Stock
Option Plans") shall be assumed by Parent in accordance with Section 5.4
hereof.
(e) Adjustment to Exchange Ratio. If between the date of this Agreement
and the Effective Time, the outstanding shares of Parent Common Stock or
the Company Common Stock shall have been changed into a different number of
shares or a different class by reason of any reclassification,
recapitalization, split-up, stock dividend, stock combination, exchange of
shares, readjustment or otherwise, then the Exchange Ratio shall be
correspondingly adjusted. Nothing in this Section 2.1(e) shall be construed
to relieve the parties from their respective obligations under Section 4.1
below.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. Parent shall deposit, or shall cause to be deposited,
with American Stock Transfer and Trust Company, as exchange agent for Parent
Common Stock (the "Exchange Agent") as of the Effective Time (or otherwise when
requested by the Exchange Agent from time to time in order to effect any
exchange pursuant to this Section 2.2), for the benefit of the holders of
shares of the Company Common Stock for exchange in accordance with this Article
II through the Exchange Agent, certificates representing the shares of Parent
Common Stock issuable pursuant to Section 2.1 in exchange for outstanding
shares of the Company Common Stock (such certificates representing shares of
Parent Common Stock together with any dividends or distributions with respect
thereto, being collectively referred to as the "Exchange Fund"), and cash in an
amount sufficient for payment in lieu of fractional shares pursuant to Section
2.2 (e). The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Parent Common Stock contemplated to be issued pursuant to Section
2.1 out of the Exchange Fund. Except as contemplated by Section 2.2(e), the
Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Exchange Agent to mail to each holder
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of the Company Common Stock (for convenience of
reference, the certificates of the Company Common Stock are referred to as the
"Certificates"), (i) a letter of transmittal (which shall be in customary form
and shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, and the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in respect of the shares of the Company
Common Stock formerly evidenced by such Certificate (after taking into account
the provisions of this Agreement and all shares of the Company Common Stock
then held of record by such holder), cash in lieu of fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(c), and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of the Company Common
Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate, accompanied by all documents
required to evidence and effect such transfer, shall be properly endorsed with
signature guarantee or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the issuance of shares of Parent Common Stock to a person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is
A-5
<PAGE>
not applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate evidencing whole
shares of Parent Common Stock, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2(e) and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.2(c). No interest will be paid or will accrue on any cash payable
pursuant to Section 2.2(c) or 2.2(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made on or after the Effective Time with respect to
Parent Common Stock with a record date on or after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of Parent Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e),
in each case until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable escheat laws, following
surrender of such Certificate, there shall be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
any such cash payable in lieu of a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date on or after the Effective
Time theretofore paid with respect to such whole shares of Parent Common Stock,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date on or after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in the Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of the Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such shares of the Company Common Stock
in accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time and have not been paid
prior to surrender. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registrations of
transfers of shares of the Company Common Stock, or transfer or exercise of the
Company Stock Options thereafter on the records of the Company. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, Parent
or the Exchange Agent for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(e) No Fractional Shares.
(i) No Certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Parent.
(ii) Each holder of a Certificate issued and outstanding at the
Effective Time who would otherwise be entitled to receive a fractional
share of Parent Common Stock upon surrender of such Certificate for
exchange pursuant to this Article II (after taking into account all shares
of Company Common Stock then held by such holder) shall receive, in lieu
thereof, cash in an amount equal to the value of such fractional share,
which shall be equal to the fraction of a share of Parent Common Stock that
would otherwise be issued multiplied by the average closing price for a
share of Parent Common Stock on the Nasdaq National Market (as reported in
The Wall Street Journal) during the 20 consecutive trading days ending on
the third trading day prior to the Effective Time.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates with respect to any
fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Certificates subject to and in accordance with
the terms of Section 2.2(c).
A-6
<PAGE>
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Certificates for twelve months after
the Effective Time shall be delivered to Parent, upon demand, and any holders
of Certificates who have not theretofore complied with this Article II shall
thereafter look as a general creditor only to Parent for payment of the shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock to
which they are entitled.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any holder of shares of the Company Common Stock, or Stock
Options for any shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common
Stock, cash in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c).
ARTICLE III
Representations and Warranties
Section 3.1 Representations and Warranties of the Company. Notwithstanding
anything herein to the contrary, no representation is or shall be considered to
have been made with respect to any litigation, claims or disputes between the
Company and Parent or their respective subsidiaries, the merits of any such
claim or merits of defenses related thereto, based on the intellectual property
of the Company or Parent or their respective subsidiaries. Except as included
in, or filed in connection with, the Company SEC Documents (as defined in
Section 3.1(e)) which are Publicly Available ("Publicly Available" means
documents filed with the SEC that are publicly available on or before August
31, 1999, which shall be deemed to include exhibits to documents filed with the
SEC for which confidential treatment has been sought) or on the disclosure
schedule delivered by the Company to Parent prior to the execution of this
Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and each of
its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized
and has the requisite corporate power and authority to carry on its
business as now being conducted. The Company and each of its subsidiaries
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a "material
adverse effect" (as defined in Section 8.3(d)) on the Company.
(b) Subsidiaries. The Company Disclosure Schedule lists each subsidiary
of the Company and its jurisdiction of incorporation or organization. All
the outstanding shares of capital stock of each such subsidiary that is a
corporation have been validly issued and are fully paid and nonassessable.
The shares of capital stock, membership interests and partnership
interests, as applicable, of each such subsidiary that is owned by the
Company, by another subsidiary of the Company or by the Company and another
such subsidiary, are owned free and clear of all liens. Except for (i) the
capital stock of its subsidiaries that are corporations, and (ii) except
for the membership interests or partnership interests of its subsidiaries
that are
A-7
<PAGE>
limited liability companies or partnerships, and (iii) except for
investments in marketable securities, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 650,000,000 shares of the Company Class A Common Stock,
300,000,000 shares of the Company Class B Common Stock, and 2,000,000
shares of the Company's Preferred Stock, $0.01 par value. At the close of
business on September 30, 1999, (i) 77,126,612 shares of the Company Class
A Common Stock were issued and outstanding and 74,993,176 shares of the
Company Class B Common Stock were issued and outstanding, (ii) no shares of
the Company Common Stock were held by the Company in its treasury, (iii)
4,253,584 shares of the Company Common Stock were reserved for issuance
upon exercise of the outstanding Company Stock Options, and (iv) 1,861,894
shares of the Company Common Stock were reserved for issuance upon exercise
of Company Stock Options available for grant under the Company Stock Option
Plans. As of September 30, 1999, there are no shares of the Company's
Preferred Stock issued or outstanding. Except as set forth above, at the
close of business on September 30, 1999, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance
or outstanding. All options to purchase shares of Company Common Stock were
granted under the Company Stock Option Plans. There are no outstanding
stock appreciation rights of the Company and no outstanding limited stock
appreciation rights or other rights to redeem for cash options or warrants
of the Company. All outstanding shares of capital stock of the Company are,
and all shares which may be issued upon the exercise of Company Stock
Options will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of the Company may vote.
Except as set forth above and except for the Company Option Agreement, as
of the date of this Agreement, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is
a party or by which any of them is bound obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock (or options to acquire any
such shares) of the Company or any of its subsidiaries. Except for revenue
sharing arrangements in license agreements entered into in the ordinary
course of business, there are no agreements, arrangements or commitments of
any character (contingent or otherwise) pursuant to which any person is or
may be entitled to receive any payment based on the revenues, earnings or
financial performance of the Company or any of its subsidiaries or assets
or calculated in accordance therewith (other than ordinary course payments
or commissions to sales representatives of the Company based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby) or to cause the Company or any of its subsidiaries to
file a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or which otherwise relate to the registration of
any securities of the Company. Neither the Company nor any of its
subsidiaries owns of record or beneficially any shares of Parent Common
Stock.
(d) Authority; Noncontravention. The Company has the requisite corporate
power and authority to enter into this Agreement and the Company Ancillary
Agreements (as defined in Section 8.3(c) hereof) and, subject to the
Company Stockholder Approval, to consummate the transactions contemplated
by this Agreement and the Company Ancillary Agreements. The execution and
delivery of this Agreement and the Company Ancillary Agreements by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement and the Company Ancillary Agreements have
been duly authorized by all necessary corporate action on the part of the
Company, subject to the Company Stockholder Approval of this Agreement.
This Agreement and the Company Ancillary Agreements have been duly executed
and delivered by the Company and constitute a valid and binding obligation
of the
A-8
<PAGE>
Company, enforceable against the Company in accordance with its terms,
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally and (ii)
the availability of injunctive relief and other equitable remedies. The
execution and delivery of this Agreement and the Company Ancillary
Agreements do not, and the consummation of the transactions contemplated by
this Agreement and the Company Ancillary Agreements and compliance with the
provisions of this Agreement and the Company Ancillary Agreements will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any lien upon any of
the properties or assets of the Company or any of its subsidiaries under,
(i) the certificate of incorporation or bylaws of the Company or the
comparable charter or organizational documents of any of its subsidiaries,
(ii) the Exclusive Affiliation Agreement between TV Guide Interactive, Inc.
and Satellite Services, Inc., dated March 4, 1999, (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its subsidiaries or their
respective properties or assets or (iv) subject to the governmental filings
and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (iii) or (iv), any such
conflicts, violations, defaults, rights or liens that individually or in
the aggregate would not (x) have a material adverse effect on the Company,
(y) impair in any material respect the ability of the Company to perform
its obligations under this Agreement and the Company Ancillary Agreements
or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement and the Company Ancillary
Agreements. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local
government or any court, administrative or regulatory agency or commission
or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement and the Company Ancillary Agreements by the Company or the
consummation by the Company of the transactions contemplated by this
Agreement and the Company Ancillary Agreements, except for (i) the filing
with the Federal Trade Commission and the Antitrust Division of the
Department of Justice (the "Specified Agencies") of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (ii) the filing with
the Securities and Exchange Commission (the "SEC") of (x) the Proxy
Statement (as defined in Section 5.1) and (y) such reports under Sections
13(a), 13(d) and 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement
and the Company Ancillary Agreements and the transactions contemplated by
this Agreement and the Company Ancillary Agreements, (iii) the filing of
the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (iv) any filings with the
Federal Communications Commission (the "FCC") or any filings with the
United States Committee of Foreign Investments pursuant to the Exxon-Florio
Amendment to the Defense Protection Act of 1988 ("Exxon-Florio"), and (v)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings, including under (x) the laws of any foreign
country in which the Company or any of its subsidiaries conducts any
business or owns any property or assets or (y) the "takeover" or "blue sky"
laws of various states, the failure of which to be obtained or made would
not, individually or in the aggregate, have a material adverse effect on
the Company or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement and the Company Ancillary
Agreements.
(e) SEC Documents; Financial Statements. The Company has filed with the
SEC all required reports and forms and other documents (the "Company SEC
Documents"). As of their respective dates, except as subsequently amended
in a Publicly Available Company SEC Document, the Company SEC Documents
complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to
A-9
<PAGE>
such Company SEC Documents and, to Company's knowledge, none of the Company
SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent
consolidated balance sheet included in the Publicly Available Company SEC
Documents, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be recognized or disclosed on
a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of the Company and its consolidated subsidiaries taken as a
whole.
(f) Contracts. The Company has no executory agreement, contract,
arrangement or other obligation (i) with an affiliate (including with any
officer or director) of the Company (whether such executory agreement,
contract, arrangement or other obligation is oral or written) which would
be required by Rule 601 of SEC Regulation S-K to be filed as an exhibit to
an Annual Report on Form 10-K, or (ii) to sell, dispose or acquire a
"Significant Subsidiary," as such term is defined in Rule 1-02 of SEC
Regulation S-X.
(g) Absence of Certain Changes or Events. (a) Since June 30, 1998, there
has not been any change, event or circumstance which, when taken
individually or together with all other changes, events or circumstances,
has had or would have a material adverse effect on the Company, and (b)
from December 31, 1998 to the date of this Agreement, (i) each of the
Company and its subsidiaries has conducted its businesses in the ordinary
course and in a manner consistent with past practice and (ii) there has not
been (A) any change by the Company or any of its subsidiaries in its
accounting policies, practices and procedures having an overall material
adverse effect on its assets, liabilities or earnings, except as required
by GAAP, (B) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any of its
subsidiaries (other than cash dividends payable by any wholly owned
subsidiary to another subsidiary or the Company), or (C) any increase in
the compensation payable or to become payable to any corporate officer or
heads of divisions of the Company or any of its subsidiaries whose annual
base compensation exceeds $500,000, except in the ordinary course of
business consistent with past practice or as required by employment
agreements in effect as of the date hereof.
(h) Litigation. There is no suit, action, investigation, audit or
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a material adverse
effect on the Company, (ii) impair in any material respect the ability of
the Company to perform its obligations under this Agreement or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or
any of its subsidiaries having, or which is reasonably likely to have, any
effect referred to in the foregoing clauses (i), (ii) or (iii).
(i) Absence of Changes in Benefit Plans. Except (i) as would not have,
in the aggregate, a material adverse effect on the Company, or (ii) as
required by applicable law, since March 1, 1999, no collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation,
A-10
<PAGE>
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (collectively, "Benefit Plans") has been adopted
or amended by the Company or its subsidiaries which provides benefits to any
current or former employee, officer or director of the Company or any of its
subsidiaries. There exist no employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former officer or
director of the Company or any of its subsidiaries as to which unsatisfied or
potential obligations of the Company exist which individually are greater
than $500,000 per year. Except as would not have, in the aggregate, a
material adverse effect on the Company and except as contemplated by this
Agreement, since March 1, 1999, neither the Company nor any of its
subsidiaries has taken any action to accelerate any rights or benefits under
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director or officer or for the
benefit of employees generally.
(j) ERISA Compliance.
(i) The Company has made, or shall if requested make, available to
Parent true, complete and correct copies of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein
as "Pension Plans"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA) and all other Benefit Plans currently maintained,
or contributed to, or required to be maintained or contributed to, by the
Company or any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (each a "Company Commonly Controlled Entity"), including all
employment, termination, severance or other contracts for the benefit of
any current or former employees, officers or directors of the Company or
any of its subsidiaries as to which unsatisfied or potential obligations
of the Company which individually are greater than $500,000 per year
exist. The Company has made, or shall if requested make, available to
Parent true, complete and correct copies of (v) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect
to each of its Benefit Plans (if any such report was required), (w) the
most recently prepared actuarial report for each such Benefit Plan (if any
such report was required), (x) the most recent summary plan description
for each such Benefit Plan for which such summary plan description is
required under ERISA, (y) the most recently received Internal Revenue
Service determination letter for each such Benefit Plan that is intended
to be qualified under Section 401(a) of the Code and (z) each trust
agreement and group annuity contract relating to any such Benefit Plan.
(ii) Except as would not have, in the aggregate, a material adverse
effect on the Company, each of the Company's and its subsidiaries' Benefit
Plans has been administered in accordance with its terms. Except as would
not have, in the aggregate, a material adverse effect on the Company, the
Company, each of its subsidiaries and all such Benefit Plans are in
compliance with applicable provisions of ERISA and the Code.
(iii) All of the Company's and its subsidiaries' Pension Plans
intended to be qualified under Section 401(a) of the Code have been the
subject of determination letters from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from federal
income taxes under Section 401(a) and 501(a), respectively, of the Code
and, to the knowledge of the Company, no such determination letter has
been revoked nor has revocation of such determination letter been
threatened, nor has any such Pension Plan been amended since the date of
its most recent determination letter or application therefor in any
respect that could reasonably be expected to adversely affect its
qualification or materially increase its costs.
(iv) No Pension Plan that the Company or any of its subsidiaries
maintains is subject to Title IV of ERISA.
(v) To the knowledge of the Company, none of the Company, any of its
subsidiaries, any officer of the Company or any of its subsidiaries or any
of the Company's or its subsidiaries' Benefit Plans
A-11
<PAGE>
which are subject to ERISA, including, without limitation, its Pension
Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a non-exempt "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code) or
any other breach of fiduciary responsibility that could reasonably be
expected to subject the Company, or any of its subsidiaries or any officer
of the Company or any of its subsidiaries, to tax or penalty under ERISA,
the Code or other applicable law that, except as would not have, in the
aggregate, a material adverse effect on the Company, has not been
corrected. Neither any of such Benefit Plans nor any of such trusts has
been terminated, nor has there been any "reportable event" (as that term
is defined in Section 4043 of ERISA) with respect thereto, during the last
five years.
(vi) Without regard to Company Stock Options, the consummation of
the transactions contemplated by this Agreement will not result in an
increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits payable to or in respect of
any employee or former employee of the Company or any subsidiary of the
Company or the beneficiary or dependent of any such employee or former
employee.
(vii) With respect to any of the Company's or any of its
subsidiaries' Benefit Plans that is an employee welfare benefit plan, (x)
no such Benefit Plan is funded through a "welfare benefit fund," as such
term is defined in Section 419(e) of the Code, (y) each such Benefit Plan
that is a "group health plan," as such term is defined in Section
5000(b)(1) of the Code, complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code and (z) each such
Benefit Plan (including any such Benefit Plan covering retirees or other
former employees) may be amended or terminated without a material adverse
effect on the Company.
(viii) Except as would not have, in the aggregate, a material
adverse effect on the Company, no Company Commonly Controlled Entity has
incurred any material liability to a Pension Plan of the Company or any of
its subsidiaries (other than for contributions not yet due).
(k) Taxes.
(i) To the Company's knowledge and except as would not have, in the
aggregate, a material adverse effect on the Company, (A) each of the
Company and its subsidiaries has timely filed all federal, state, local
and foreign tax returns and reports required to be filed by it through the
date hereof and shall timely file all such returns and reports required to
be filed on or before the Effective Time; (B) all such returns and reports
are and will be true, complete and correct in all material respects; (C)
the Company and each of its subsidiaries has paid and discharged (or the
Company has paid and discharged on such subsidiary's behalf) all taxes due
from them, other than such taxes as are being or will be contested in good
faith by appropriate proceedings and are, in the judgment of the
management of the Company, adequately reserved for on the most recent
financial statements contained in the Publicly Available Company SEC
Documents filed prior to the date of this Agreement; (D) the most recent
financial statements contained in the Company SEC Documents filed prior to
the date of this Agreement properly reflect in accordance with GAAP all
taxes payable by the Company and its subsidiaries for all taxable periods
and portions thereof through the date of such financial statements.
(ii) No claim or deficiency for any taxes has been proposed,
threatened, asserted or assessed by the Internal Revenue Service (the
"IRS") or any other taxing authority or agency against the Company, or any
of its subsidiaries which, if resolved against the Company or any of its
subsidiaries, would, individually or in the aggregate, have a material
adverse effect upon the Company. Neither the Company nor any of its
subsidiaries has waived any statute of limitations in respect of any taxes
or agreed to any extension of time with respect to a tax assessment or
deficiency.
(iii) Neither the Company nor any of its subsidiaries has taken or
agreed to take any action or has any knowledge of any fact or circumstance
that is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
A-12
<PAGE>
(iv) Neither the Company nor any of its subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible corporations.
Neither the Company nor any of its subsidiaries has been a United States
real property holding corporation within the meaning of Code Section
897(c)(2). Each of the Company and its subsidiaries has disclosed on its
federal income tax returns all positions taken therein that could give
rise to a substantial understatement of federal income tax within the
meaning of Code Section 6662. Neither the Company nor any of its
subsidiaries is a party to any tax allocation or tax sharing agreement.
Neither the Company nor any of its subsidiaries has any liability for the
taxes of any person (other than any of the Company and its subsidiaries)
under Treasury Regulation Section 1.1502 -6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(v) As used in this Agreement, "taxes" shall include all federal,
state, local and foreign income, property, sales, excise and other taxes,
of any nature whatsoever (whether payable directly or by withholding),
together with any interest and penalties, additions to tax or additional
amounts imposed with respect thereto. Notwithstanding the definition of
"subsidiary" set forth in Section 8.3(g) of this Agreement, for the
purposes of this Section 3.1(k), references to the Company and each of its
subsidiaries shall include former subsidiaries of the Company for the
periods during which any such corporations were included in the
consolidated federal income tax return of the Company.
(l) Compliance with Applicable Laws.
(i) Each of the Company and its subsidiaries has in effect all
federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has
occurred no default under any such Permit, except for the lack of Permits
and for defaults under Permits which lack or default individually or in
the aggregate would not have a material adverse effect on the Company. To
the knowledge of the Company, no Governmental Entity is considering
limiting, suspending or revoking any of the Company's or its subsidiaries'
Permits. The Company and its subsidiaries are in compliance with (and have
not violated) all applicable statutes, laws, ordinances, rules, orders and
regulations (including, without limitation, those relating to safety,
hiring, promotion or pay of employees) of any Governmental Entity, except
for noncompliance which individually or in the aggregate would not have a
material adverse effect on the Company.
(ii) To the knowledge of the Company, the Company and each of its
subsidiaries is, and has been, and each of the Company's former
subsidiaries, while subsidiaries of the Company, was, in compliance in all
material respects with all applicable Environmental Laws, except for
noncompliance which individually or in the aggregate would not have a
material adverse effect on the Company. The term "Environmental Laws"
means any federal, state, local or foreign statute, code, ordinance, rule,
regulation, policy, guideline, permit, consent, approval, license,
judgment, order, writ, decree, injunction or other authorization,
including the requirement to register underground storage tanks, relating
to: (A) emissions, discharges, releases or threatened releases of
Hazardous Material (as defined below) into the environment, including,
without limitation, into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly
owned treatment works, septic systems or land; or (B) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation
or shipment of Hazardous Material.
(iii) During the period of ownership or operation by the Company and
its subsidiaries of any of their respective current or previously owned or
leased properties, there have been no releases of Hazardous Material in,
on, under or affecting such properties or, to the knowledge of the
Company, any surrounding site, except in each case for those which
individually or in the aggregate are not reasonably likely to have a
material adverse effect on the Company. Prior to the period of ownership
or operation by the Company and its subsidiaries of any of their
respective current or previously owned or leased properties, to the
knowledge of the Company, no Hazardous Material was generated,
A-13
<PAGE>
treated, stored, disposed of, used, handled or manufactured at, or
transported, shipped or disposed of from, such current or previously owned
or leased properties, and there were no releases of Hazardous Material in,
on, under or affecting any such property or any surrounding site, except
in each case for those which individually or in the aggregate are not
reasonably likely to have a material adverse effect on the Company. The
term "Hazardous Material" means (A) hazardous materials, contaminants,
constituents, medical wastes, hazardous or infectious wastes and hazardous
substances as those terms are defined in the following statutes and their
implementing regulations: the Hazardous Materials Transportation Act, 49
U.S.C. (S) 1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. (S) 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. (S) 9601 et seq., the Clean Water Act, 33
U.S.C. (S) 1251 et seq. and the Clean Air Act, 42 U.S.C. (S) 7401 et seq.,
(B) petroleum, including crude oil and any fractions thereof, (C) natural
gas, synthetic gas and any mixtures thereof, (D) asbestos and/or asbestos-
containing material and (E) polychlorinated biphenyls ("PCBs") or
materials or fluids containing PCBs in excess of 50 ppm.
(m) Brokers. Except for Merrill Lynch & Co., Inc., the fees and expenses
of which will be paid by the Company, no broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
(n) Opinion of Financial Advisor. The Company has received the opinion
of Merrill Lynch & Co., Inc., dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair to the Company's
stockholders, other than Liberty, News Corp., Parent and their respective
affiliates, from a financial point of view, and a signed copy of such opinion
has been delivered to Parent.
(o) Voting Requirements. The Company Stockholder Approval is the only
vote of the holders of any class or series of the Company's securities
necessary to approve this Agreement and the transactions contemplated by this
Agreement.
(p) Noncompetition. The Company and its subsidiaries are not subject to
any restriction of competition with respect to their respective businesses.
(q) Intellectual Property. Except as would not have, in the aggregate, a
material adverse effect on the Company, the Company and each of its
subsidiaries owns or possesses adequate and enforceable licenses or other
rights to use all patents, trade secrets, trade names, trademarks, inventions
and processes used in and material to the business of the Company or such
subsidiary as currently conducted, and such licenses and rights will not be
affected by the consummation of the Merger. Neither the Company nor any of
its subsidiaries has received any written notice or charge of patent,
trademark or copyright infringement which asserts the rights of others with
respect to such licenses and rights which is reasonably likely to have a
material adverse effect on the Company. Except as would not have, in the
aggregate, a material adverse effect on the Company, the Company owns or
rightfully possesses (i) the source code, recorded on computer magnetic media
and in written form, for its information systems programs, including both the
information systems programs themselves and the product related
infrastructure (the "Company Software"), and (ii) all commentary,
explanations, specifications, documentation, proprietary information, test
programs and program specifications, compiler and assembler descriptions of
proprietary or third party system utilities, and descriptions of
system/program generation and programs not owned by the Company but required
for use or support, relating to the Company Software that are reasonably
necessary for the Surviving Corporation to maintain and enhance the Company
Software, and to provide a commercially standard level of service and support
to users of the Company Software without the aid of any other party and
without use of any other material.
(r) Year 2000 Compliance.
(i) The Company does not believe that the cost of required
modifications to its Company Systems to make the Company Year 2000
Compliant will have a material adverse effect on the Company.
A-14
<PAGE>
(ii) For purposes of this Section 3.1(r), (i) "Company Systems"
shall mean all computer, hardware, software, systems, and equipment
(including embedded microcontrollers in non-computer equipment) embedded
within the current products of the Company and its subsidiaries, and/or
material to or necessary for the Company and its subsidiaries to carry on
their respective businesses as currently conducted; and (ii) "Company Year
2000 Compliant" means that Company Systems will (A) manage, accept,
process, store and output data involving dates reasonably expected to be
encountered in the foreseeable future and (B) accurately process date data
from, into and between the 20th and 21st centuries and each date during
the years 1999 and 2000.
(s) Stockholders' Agreement. News Corp. and Liberty have entered into
the Stockholders' Agreement (the "Stockholders' Agreement") with Parent and
Henry C. Yuen attached hereto as Exhibit 3.1(s), which agreement shall become
binding and enforceable effective only upon the Effective Time.
Section 3.2 Representations and Warranties of Parent and Sub.
Notwithstanding anything herein to the contrary, no representation is or shall
be considered to have been made with respect to any litigation claims or
disputes between the Company and Parent or their respective subsidiaries, the
merits of any such claim or merits of defenses related thereto, based on the
intellectual property of the Company or Parent or their respective subsidiaries.
Except as included in, or filed in connection with, the Parent SEC Documents (as
defined in Section 3.2(e)) or reports, forms and other documents filed with the
SEC by StarSight Telecast, Inc., in each case, which are Publicly Available or
on the disclosure schedule delivered by Parent to the Company prior to the
execution of this Agreement (the "Parent Disclosure Schedule"), Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Parent and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to carry on its business as
now being conducted. Parent and each of its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed (individually
or in the aggregate) would not have a material adverse effect on Parent.
(b) Subsidiaries. The Parent Disclosure Schedule lists each subsidiary
of the Parent and its jurisdiction of incorporation or organization. All the
outstanding shares of capital stock, membership interests and partnership
interests, as applicable, of each such subsidiary that is a corporation have
been validly issued and are fully paid and nonassessable. The shares of
capital stock of each such subsidiary that is owned by the Parent, by another
subsidiary of the Parent or by the Parent and another such subsidiary, are
owned free and clear of all liens. Except for (i) the capital stock of its
subsidiaries that are corporations, and (ii) except for the membership
interests or partnership interests of its subsidiaries that are limited
liability companies or partnerships, and (iii) except for investments in
marketable securities, Parent does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
joint venture or other entity.
(c) Capital Structure. The authorized capital stock of Parent consists
of 500,000,000 shares of Parent Common Stock, par value $.01 per share, and
50,000,000 preference shares, par value $.01 per share ("Parent Preference
Shares") of which 10,000,000 shares have been designated Series A Junior
Participating Preference Shares. At the close of business on September 30,
1999, (i) 100,354,000 shares of Parent Common Stock and no shares of Parent
Preference Shares were issued and outstanding, (ii) 1,395,000 shares of
Parent Common Stock were held by Parent in its treasury, (iii) 25,372,000
shares of Parent Common Stock were reserved for issuance upon exercise of
outstanding employee stock options ("Parent Stock Options") to purchase
shares of Parent Common Stock under the Parent Stock Incentive Plan (as
defined below), and (iv) 7,695,000 shares of the Parent Common Stock were
reserved for issuance upon exercise of Parent Stock Options available for
grant under the Parent Stock Incentive Plan. Except as set forth above, at
the close of business on September 30, 1999, no shares of capital stock or
other voting
A-15
<PAGE>
securities of the Parent were issued, reserved for issuance or outstanding.
All options to purchase shares of Parent Common Stock were granted under the
Gemstar International Group Limited 1994 Stock Incentive Plan (the "Parent
Stock Incentive Plan"). There are no outstanding stock appreciation rights of
Parent and no outstanding limited stock appreciation rights or other rights
to redeem for cash options or warrants of Parent. All outstanding shares of
capital stock of Parent are, and all shares which may be issued upon the
exercise of stock options will be, and all shares which may be issued
pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness of Parent having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of Parent may
vote. Except as set forth above and except for the Parent Option Agreement,
as of the date of this Agreement, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent or any of its subsidiaries is a
party or by which any of them is bound obligating Parent or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of Parent
or of any of its subsidiaries or obligating Parent or any of its subsidiaries
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations of Parent or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock (or
options to acquire any such shares) of Parent or any of its subsidiaries.
Except for revenue arrangements in license agreements entered into in the
ordinary course of business, there are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on the revenues,
earnings or financial performance of Parent or any of its subsidiaries or
assets or calculated in accordance therewith (other than ordinary course
payments or commissions to sales representatives of Parent based upon
revenues generated by them without augmentation as a result of the
transactions contemplated hereby) or to cause Parent or any of its
subsidiaries to file a registration statement under the Securities Act, or
which otherwise relate to the registration of any securities of Parent. As of
the date of this Agreement, the authorized capital stock of Sub consists of
1,000 shares of common stock, par value $.01 per share, of which 100 shares
have been validly issued, are fully paid and nonassessable and are owned by
Parent free and clear of any liens. Neither Parent nor any of its
subsidiaries owns of record or beneficially any shares of Company Common
Stock.
(d) Authority; Noncontravention. Parent and Sub have the requisite
corporate power and authority to enter into this Agreement and the Parent
Ancillary Agreements (as defined in Section 8.3(e)) and, subject to the
Parent Stockholder Approvals, to consummate the transactions contemplated by
this Agreement and the Parent Ancillary Agreements, including to effect the
Domestication. The execution and delivery of this Agreement and the Parent
Ancillary Agreements and the consummation of the transactions contemplated by
this Agreement and the Parent Ancillary Agreements, including effecting the
Domestication, have been duly authorized by all necessary corporate action on
the part of Parent and Sub, subject to the Parent Stockholder Approvals. This
Agreement and the Parent Ancillary Agreements have been duly executed and
delivered by Parent and Sub and constitute a valid and binding obligation of
each such party, enforceable against each such party in accordance with its
terms, subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to creditors rights generally and
(ii) the availability of injunctive relief and other equitable remedies. The
execution and delivery of this Agreement and the Parent Ancillary Agreements
does not, and the consummation of the transactions contemplated by this
Agreement and the Parent Ancillary Agreements and compliance with the
provisions of this Agreement and the Parent Ancillary Agreements will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any lien upon any of the
properties or assets of Parent or any of its subsidiaries under, (i) Parent's
amended and restated memorandum of association or articles of association or
Sub's articles of incorporation or by-laws or the comparable charter or
organizational documents of any other subsidiary of
A-16
<PAGE>
Parent, (ii) the grant of rights to Parent or its applicable subsidiary of
the Levine '713 and Reiter '578 Patents, (iii) subject to the governmental
filings and other matters referred to in the following sentence, any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or
any of its subsidiaries or their respective properties or assets or (iv)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (iii) or
(iv), any such conflicts violations, defaults, rights or liens that
individually or in the aggregate would not (x) have a material adverse effect
on Parent, (y) impair in any material respect the ability of Parent and Sub
to perform their respective obligations under this Agreement and the Parent
Ancillary Agreements or (z) prevent or materially delay the consummation of
any of the transactions contemplated by this Agreement and the Parent
Ancillary Agreements. No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required
by Parent or any of its subsidiaries in connection with the execution and
delivery of this Agreement and the Parent Ancillary Agreements or the
consummation by Parent or Sub, as the case may be, of any of the transactions
contemplated by this Agreement and the Parent Ancillary Agreements, except
for (i) the filing with the Specified Agencies of a premerger notification
and report form under the HSR Act, (ii) the filing with the SEC of (x) the
Form S-4 (as defined in Section 5.1 hereof) and (y) such reports under
Sections 13(a), 13(d) and 16(a) of the Exchange Act as may be required in
connection with this Agreement and the Parent Ancillary Agreements and the
transactions contemplated by this Agreement and the Parent Ancillary
Agreements, (iii) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (iv) the
filing of the Certificate of Domestication and Certificate of Incorporation
of Parent with the Delaware Secretary of State, (v) filings required under
the laws of the British Virgin Islands in connection with the Domestication,
(vi) any required filings with the FCC or the United States Committee of
Foreign Investments pursuant to Exxon-Florio, and (vii) such other consents,
approvals, orders, authorizations, registrations, declarations and filings,
including under (x) the laws of any foreign country in which the Company or
any of its subsidiaries conducts any business or owns any property or assets
or (y) the "takeover" or "blue sky" laws of various states, the failure of
which to be obtained or made would not, individually or in the aggregate,
have a material adverse effect on Parent or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement and
the Parent Ancillary Agreements.
(e) SEC Documents; Financial Statements. Parent has filed with the SEC
all required reports and forms and other documents (the "Parent SEC
Documents"). As of their respective dates, except as subsequently amended in
a Publicly Available Parent SEC Document, the Parent SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents, and, to
Parent's knowledge, none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Parent included in the Parent SEC Documents comply as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 6-K and Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of
Parent and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end
adjustments). Except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the most
recent consolidated balance sheet included in the Publicly Available Parent
SEC Documents, neither Parent nor any of its subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute,
contingent
A-17
<PAGE>
or otherwise) required by GAAP to be recognized or disclosed on a
consolidated balance sheet of Parent and its consolidated subsidiaries or in
the notes thereto which are, individually or in the aggregate, material to
the business, results of operations or financial condition of the Parent and
its consolidated subsidiaries taken as a whole.
(f) Contracts. Parent has no executory agreement, contract, arrangement
or other obligation (i) with an affiliate (including with any officer or
director) of Parent (whether such executory agreement, contract, arrangement
or other obligation is oral or written) which would be required by Rule 601
of SEC Regulation S-K to be filed as an exhibit to an Annual Report on Form
10-K, or (ii) to sell, dispose or acquire a "Significant Subsidiary," as such
term is defined in Rule 1-02 of SEC Regulation S-X.
(g) Absence of Certain Changes or Events. (a) Since June 30, 1998, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or circumstances, has had or would
have a material adverse effect on Parent or Sub, and (b) from June 30, 1998
to the date of this Agreement, (i) each of the Parent and its subsidiaries
has conducted its businesses in the ordinary course and in a manner
consistent with past practice and (ii) there has not been (A) any change by
Parent or any of its subsidiaries in its accounting policies, practices and
procedures having an overall material adverse effect on its assets,
liabilities or earnings, except as required by GAAP, (B) any declaration,
setting aside or payment of any dividend or distribution in respect of any
capital stock of Parent or any of its subsidiaries (other than cash dividends
payable by any wholly owned subsidiary to another subsidiary or Parent), or
(C) any increase in the compensation payable or to become payable to any
corporate officer or heads of divisions of Parent or any of its subsidiaries
whose annual base compensation exceeds $500,000, except in the ordinary
course of business consistent with past practice or as required by employment
agreements in effect as of the date hereof.
(h) Litigation. There is no suit, action, investigation, audit or
proceeding pending, or to the knowledge of Parent, threatened against Parent
or any of its subsidiaries that, individually or in the aggregate, could
reasonably be expected to (i) have a material adverse effect on Parent, (ii)
impair in any material respect the ability of Parent to perform its
obligations under this Agreement or (iii) prevent the consummation of any of
the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its subsidiaries having, or which is
reasonably likely to have any effect referred to in the foregoing clauses
(i), (ii) or (iii).
(i) Absence of Changes in Benefit Plans. Except (i) as would not have,
in the aggregate, a material adverse effect on Parent or any of its
subsidiaries, or (ii) as required by applicable law, since March 1, 1999, no
collective bargaining agreement or any Benefit Plans has been adopted or
amended by the Parent or its subsidiaries which provides benefits to any
current or former employee, officer or director of Parent or any of its
subsidiaries. There exist no employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between Parent
or any of its subsidiaries and any current or former officer or director of
Parent or any of its subsidiaries as to which unsatisfied or potential
obligations of Parent exist which individually are greater than $500,000 per
year. Except as would not have, in the aggregate, a material adverse effect
on Parent or any of its subsidiaries and except as contemplated by this
Agreement, since March 1, 1999, neither Parent nor any of its subsidiaries
has taken any action to accelerate any rights or benefits under any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director or officer or for the
benefit of employees generally.
(j) ERISA Compliance.
(i) Parent has made, or shall if requested make, available to the
Company true, complete and correct copies of all "employment pension
benefit plans" (as defined in Section 3(2) of ERISA, "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit
Plans currently maintained, or contributed to, or required to be
maintained or contributed to, by Parent or
A-18
<PAGE>
any other person or entity that, together with Parent, is treated as a
single employer under Section 414(b), (c), (m), or (o) of the Code (each a
"Parent Commonly Controlled Entity"), including all employment,
termination, severance or other contracts for the benefit of any current
or former employees, officers or directors of Parent or any of its
subsidiaries as to which unsatisfied or potential obligations of Parent
which individually are greater than $500,000 per year exist. Parent has
made, or shall if requested make, available to the Company true, complete
and correct copies of (v) the most recent annual report on Form 5500 filed
with the Internal Revenue Service with respect to each of its Benefit
Plans (if any such report was required), (w) the most recently prepared
actuarial report for each such Benefit Plan (if any such report was
required), (x) the most recent summary plan description for each such
Benefit Plan for which such summary plan description is required under
ERISA, (y) the most recently received Internal Revenue Service
determination letter for each such Benefit Plan that is intended to be
qualified under Section 401(a) of the Code and (z) each trust agreement
and group annuity contract relating to any such Benefit Plan.
(ii) Except as would not have, in the aggregate, a material adverse
effect on Parent, each of Parent's and its subsidiaries' Benefit Plans has
been administered in accordance with its terms. Except as would not have,
in the aggregate, a material adverse effect on Parent or any of its
subsidiaries, Parent, each of its subsidiaries and all such Benefit Plans
are in compliance with applicable provisions of ERISA and the Code.
(iii) All of Parent's and its subsidiaries' Pension Plans intended
to be qualified under Section 401(a) of the Code have been the subject of
determination letters from the Internal Revenue Service to the effect that
such Pension Plans are qualified and exempt from federal income taxes
under Section 401(a) and 501(a), respectively, of the Code and, to the
knowledge of Parent and Sub, no such determination letter has been revoked
nor has revocation of such determination letter been threatened, nor has
any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that could
reasonably be expected to adversely affect its qualification or materially
increase its costs.
(iv) No Pension Plan that Parent or any of its subsidiaries
maintains is subject to Title IV of ERISA.
(v) To the knowledge of Parent, none of Parent, any of its
subsidiaries, any officer of Parent or any of its subsidiaries or any of
Parent's or its subsidiaries' Benefit Plans which are subject to ERISA,
including, without limitation, its Pension Plans, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a non-
exempt "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could reasonably be expected to subject Parent, or any
of its subsidiaries or any officer of Parent or any of its subsidiaries,
to tax or penalty under ERISA, the Code or other applicable law that,
except as would not have, in the aggregate, a material adverse effect on
Parent or any of its subsidiaries, has not been corrected. Neither any of
such Benefit Plans nor any of such trusts has been terminated, nor has
there been any "reportable event" (as that term is defined in Section 4043
of ERISA) with respect thereto, during the last five years.
(vi) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits
payable to or in respect of any employee or former employee of Parent or
any subsidiary of Parent or the beneficiary or dependent of any such
employee or former employee.
(vii) With respect to any of Parent's or any of its subsidiaries'
Benefit Plans that is an employee welfare benefit plan, (x) no such
Benefit Plan is funded through a "welfare benefit fund," as such term is
defined in Section 419(e) of the Code, (y) each such Benefit Plan that is
a "group health plan," as such term is defined in Section 5000(b)(1) of
the Code, complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (z) each such Benefit
Plan (including any such Benefit Plan covering retirees or other former
employees) may be amended or terminated without a material adverse effect
on Parent.
A-19
<PAGE>
(viii) Except as would not have, in the aggregate, a material
adverse effect on Parent or any of its subsidiaries, no Parent Commonly
Controlled Entity has incurred any material liability to a Pension Plan of
Parent or any of its subsidiaries (other than for contributions not yet
due).
(k) Taxes.
(i) To Parent's knowledge and except as would not have, in the
aggregate, a material adverse effect on Parent or any of its subsidiaries,
(A) each of Parent and its subsidiaries has timely filed all federal,
state, local and foreign tax returns and reports required to be filed by
it through the date hereof and shall timely file all such returns and
reports required to be filed on or before the Effective Time; (B) all such
returns and reports are and will be true, complete and correct in all
material respects; (C) Parent and each of its subsidiaries has paid and
discharged (or Parent has paid and discharged on such subsidiary's behalf)
all taxes due from them, other than such taxes as are being or will be
contested in good faith by appropriate proceedings and are, in the
judgment of the management of Parent, adequately reserved for on the most
recent financial statements contained in the Publicly Available Parent SEC
Documents filed prior to the date of this Agreement; (D) the most recent
financial statements contained in the Parent SEC Documents filed prior to
the date of this Agreement reflect an adequate reserve in accordance with
GAAP for all taxes payable by Parent and its subsidiaries for all taxable
periods and portions thereof through the date of such financial
statements.
(ii) No claim or deficiency for any taxes has been proposed,
threatened, asserted or assessed by the IRS or any other taxing authority
or agency against Parent or any of its subsidiaries which, if resolved
against Parent or any of its subsidiaries, would, individually or in the
aggregate, have a material adverse effect on Parent. Except in connection
with the tax audit disclosed in Publicly Available Parent SEC Documents
filed prior to the date of this Agreement, neither the Parent nor any of
its subsidiaries has waived any statute of limitations in respect of any
taxes or agreed to any extension of time with respect to a tax assessment
or deficiency.
(iii) Neither Parent nor any of its subsidiaries has taken or agreed
to take any action or has any knowledge of any fact or circumstance that
is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(iv) Neither Parent nor any of its subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. Neither
Parent nor any of its subsidiaries has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2). Each of
Parent and its subsidiaries has disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code Section
6662. Neither Parent nor any of its subsidiaries is a party to any tax
allocation or tax sharing agreement. Neither Parent nor any of its
subsidiaries has any liability for the taxes of any person (other than any
of Parent and its subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(l) Compliance with Applicable Laws.
(i) Each of Parent and its subsidiaries has in effect all Permits
necessary for it to own, lease or operate its properties and assets and to
carry on its business as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits and for defaults
under Permits which lack or default individually or in the aggregate would
not have a material adverse effect on Parent. To the knowledge of Parent,
no Governmental Entity is considering limiting, suspending or revoking any
of the Parent's or its subsidiaries' Permits. Parent and its subsidiaries
are in compliance with (and have not violated) all applicable statutes,
laws, ordinances, rules, orders and regulations (including, without
limitation, those relating to safety, hiring, promotion or pay of
employees) of any Governmental Entity, except for noncompliance which
individually or in the aggregate would not have a material adverse effect
on Parent.
A-20
<PAGE>
(ii) To the knowledge of Parent, Parent and each of its subsidiaries
is, and has been, and each of Parent's former subsidiaries, while
subsidiaries of Parent, was, in compliance in all material respects with
all applicable Environmental Laws, except for noncompliance which
individually or in the aggregate would not have a material adverse effect
on Parent.
(iii) During the period of ownership or operation by Parent and its
subsidiaries of any of their respective current or previously owned or
leased properties, there have been no releases of Hazardous Material in,
on, under or affecting such properties or, to the knowledge of Parent, any
surrounding site, except in each case for those which individually or in
the aggregate are not reasonably likely to have a material adverse effect
on Parent. Prior to the period of ownership or operation by Parent and its
subsidiaries of any of their respective current or previously owned or
leased properties, to the knowledge of Parent, no Hazardous Material was
generated, treated, stored, disposed of, used, handled or manufactured at,
or transported, shipped or disposed of from, such current or previously
owned or leased properties, and there were no releases of Hazardous
Material in, on, under or affecting any such property or any surrounding
site, except in each case for those which individually or in the aggregate
are not reasonably likely to have a material adverse effect on Parent.
(m) Brokers. Except for Lazard Freres & Co. LLC, the fees and expenses
of which will be paid by Parent, no broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Sub.
(n) Opinion of Financial Advisor. Parent has received the opinion of
Lazard Freres & Co. LLC, dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair to Parent from a financial
point of view, and a signed copy of such opinion has been delivered to the
Company.
(o) Voting Requirements. The Parent Stockholder Approvals are the only
votes of the holders of any class or series of Parent's securities necessary
to approve this Agreement and the transactions contemplated by this
Agreement.
(p) Noncompetition. Parent and its subsidiaries are not subject to any
restriction of competition with respect to their respective businesses.
(q) Intellectual Property. Except as would not have, in the aggregate, a
material adverse effect on Parent, Parent and each of its subsidiaries owns
or possesses adequate and enforceable licenses or other rights to use all
patents, trade secrets, trade names, trademarks, inventions and processes
used in and material to the business of Parent or such subsidiary as
currently conducted, and such licenses and rights will not be affected by the
consummation of the Merger. Neither Parent nor any of its subsidiaries has
received any written notice or charge of patent, trademark or copyright
infringement which asserts the rights of others with respect to such licenses
and rights which is reasonably likely to have a material adverse effect on
the Parent. Except as would not have, in the aggregate, a material adverse
effect on Parent, Parent owns or rightfully possesses (i) the source code,
recorded on computer magnetic media and in written form, for its information
systems programs, including both the information systems programs themselves
and the product related infrastructure (the "Parent Software") and (ii) all
commentary, explanations, specifications, documentation, proprietary
information, test programs and program specifications, compiler and assembler
descriptions of proprietary or third party system utilities, and descriptions
of system/program generation and programs not owned by Parent but required
for use or support, relating to the Parent Software that are reasonably
necessary for the Parent to maintain and enhance the Parent Software, and to
provide a commercially standard level of service and support to users of the
Parent Software without the aid of any other party and without use of any
other material.
(r) Year 2000 Compliance.
(i) Parent does not believe that the cost of required modifications
to its Parent Systems to make the Parent Year 2000 Compliant will have a
material adverse effect on the Parent.
A-21
<PAGE>
(ii) For purposes of this Section 3.2(r), (i) "Parent Systems" shall
mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) embedded within the
current products of Parent and its subsidiaries, and/or material to or
necessary for Parent and its subsidiaries to carry on their respective
businesses as currently conducted; and (ii) "Parent Year 2000 Compliant"
means that Parent Systems will (A) manage, accept, process, store and
output data involving dates reasonably expected to be encountered in the
foreseeable future and (B) accurately process date data from, into and
between the 20th and 21st centuries and each date during the years 1999
and 2000.
(s) Interim Operations of Sub.
(i) Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business
activities and has conducted its operations only as contemplated hereby.
(ii) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation
or organization and the transactions contemplated by this Agreement, Sub
has not and will not have incurred, directly or indirectly, through any
subsidiary, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements
or arrangements with any person.
(t) Stockholders' Agreement. Parent and Henry C. Yuen have entered into
the Stockholders' Agreement attached hereto as Exhibit 3.1(s), which
agreement shall become binding and effective only upon the Effective Time.
(u) Yuen Amendment. Henry C. Yuen, Parent and Gemstar Development
Corporation ("GDC") have entered into the amendment (the "Yuen Amendment")
attached hereto as Exhibit 3.2(u) to the Employment Agreement, dated January
7, 1998, by and among Henry C. Yuen, Parent and GDC (the "Yuen Employment
Agreement"), which amendment shall become effective only upon the Effective
Time.
ARTICLE IV
Covenants Relating to Conduct of Business
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Company shall, and
shall cause its subsidiaries to, use all reasonable efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them. Between the date of
this Agreement and the Effective Time or until the earlier termination of this
Agreement pursuant to its terms, except (1) as contemplated by this Agreement,
(2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, or (3)
with the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed), the Company shall not, and shall not permit
any of its subsidiaries to:
(i) (A) declare, set aside or pay (whether in cash, stock, property or
otherwise) any dividends on, or make any other distributions in respect of,
any of its capital stock, other than dividends and distributions by any
direct or indirect wholly owned subsidiary of the Company to its parent, (B)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, provided, however,
that with respect to clause (C) only, the Company may take such actions in an
aggregate amount not to exceed $50
A-22
<PAGE>
million in addition to any such actions taken as required by the proviso in
Section 4.1(a)(ii)(E) to offset issuances of capital stock in an acquisition
permitted under Section 4.1(a)(iv) or as may be necessary to satisfy the
condition set forth in Section 6.2(d);
(ii) (x) issue, deliver, sell, award, pledge, dispose of or otherwise
encumber or authorize or propose the issuance, delivery, grant, sale, award,
pledge or other encumbrance (including limitations in voting rights) or
authorization of, any shares of its capital stock, any voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities, (y)
amend or otherwise modify the terms of any such rights, warrants or options
(except as expressly contemplated by this Agreement) or (z) accelerate the
vesting of any of the Company Stock Options except for Company Stock Options
granted on or before January 1, 1999 in each case other than (A) the issuance
of the Company Common Stock upon the exercise of Company Stock Options
outstanding under the Company Stock Option Plans on the date of this
Agreement in accordance with their present terms or in accordance with the
present terms of any employment agreements existing on the date of this
Agreement, (B) the grant of stock options to employees and directors to
purchase up to 1,771,376 shares of Company Common Stock pursuant to the
Company Stock Option Plans as in effect on the date of this Agreement (as the
same may be amended to increase the number of shares of Company Common Stock
which may be the subject of awards thereunder), and the issuance of Company
Common Stock upon the exercise thereof, (C) the grant of stock options to
employees to purchase up to 50,000 shares of Company Common Stock pursuant to
the TV Guide, Inc. Equity Incentive Plan as in effect on the date of this
Agreement (as the same may be amended to increase the number of shares of
Company Common Stock which may be the subject of awards thereunder);
provided, however, that no single employee may be granted options to purchase
more than 10,000 shares of Company Common Stock pursuant to this clause (C),
(D) the grant of stock options (with the prior consent of Parent, which
consent shall not be unreasonably withheld) to new employees of the Company
hired after the date hereof to purchase up to 200,000 shares of Company
Common Stock pursuant to the TV Guide, Inc. Equity Incentive Plan as in
effect on the date of this Agreement (as the same may be amended to increase
the number of shares of Company Common Stock which may be the subject of
awards thereunder), and (E) the issuance of Company Common Stock in
connection with a transaction not prohibited by Section 4.1(a)(iv); provided,
however, that stock issuances in connection with a transaction permitted
under Section 4.1(a)(iv) hereof may not exceed the number of shares of
Company Common Stock purchased by the Company after the date hereof;
(iii) amend its certificate of incorporation, bylaws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (for cash or shares of stock or
otherwise) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof; provided, however, that the Company and its
subsidiaries may enter into such transactions (in addition to those listed on
Schedule 4.1(a)), other than with an affiliate, if the purchase price and
required capital contributions therefor (whether consisting of cash or
Company Common Stock or a combination of both) do not exceed, in the
aggregate, $200 million (the "Company Acquisition Basket"), and if such
transactions would not be reasonably likely to prevent or materially delay
the consummation of the Merger;
(v) mortgage or otherwise encumber or subject to any lien (a non-
exclusive license shall not be considered a mortgage, encumbrance or lien),
or sell, lease, exchange or otherwise dispose of any of, its properties or
assets, except for sales of its properties or assets in the ordinary course
of business consistent with past practice or other sales that, exclusive of
the transactions listed on Schedule 4.1(a) of the Company Disclosure
Schedule, do not exceed in the aggregate, $50 million;
(vi) dispose of, pledge or encumber any of the Company's or its
subsidiaries' intellectual property, except through non-exclusive license
agreements;
A-23
<PAGE>
(vii) except in the ordinary course of business, (A) increase the rate
or terms of compensation payable or to become payable generally to any of the
Company's or any of its subsidiaries' directors, executive officers, or
employees other than usual and customary salary increases to non-management
employees, (B) pay or agree to pay any pension, retirement allowance or other
employee benefit not provided for by any existing Pension Plan, Benefit Plan
or employment agreement described in the Publicly Available Company SEC
Documents, (C) commit itself to any additional pension, profit sharing,
bonus, incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, continuation pay,
termination pay, retirement or other employee benefit plan, agreement or
arrangement, or increase the rate or terms of any employee plan or benefit
arrangement, (D) enter into any employment agreement with or for the benefit
of any person or (E) increase the rate of compensation under or otherwise
change the terms of or renew any existing employment agreement; provided,
however, that nothing in this clause (vii) shall (x) preclude payments under
the terms of the existing incentive compensation plans of the Company in
accordance with past practice or (y) preclude the Company from extending the
term of any employment agreement of any senior officer (other than Peter
Boylan and Joe Kiener) for up to two years or (z) preclude the Company from
adjusting the base compensation with respect to any senior officer (other
than Peter Boylan and Joe Kiener) by not more than 15%;
(viii) change its fiscal year;
(ix) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants
or other rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for (x) indebtedness incurred to effect a
transaction disclosed on Schedule 4.1(a) of the Company Disclosure Schedule,
(y) indebtedness incurred or assumed in connection with one or more
acquisition transactions permitted under Section 4.1(a)(iv), provided that
indebtedness assumed in connection with any such transaction (as opposed to
indebtedness incurred to effect any such transaction which will be counted
solely against the limitations of Section 4.1(a)(iv)) shall not exceed the
amount that would otherwise be permitted to be incurred pursuant to clause
(z) below plus any remaining balance in the Company Acquisition Basket, and
(z) indebtedness which when added to existing indebtedness of the Company and
its subsidiaries (other than indebtedness incurred pursuant to clause (x) and
indebtedness incurred or assumed pursuant to clause (y) to the extent that
such indebtedness reduces the available amount in the Company Acquisition
Basket) does not exceed in the aggregate $650 million, or (B) other than in
the ordinary course of business consistent with past practice and within the
limits specified in Section 4.1(a)(iv) or as set forth on Schedule 4.1(a),
make any loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or indirect wholly
owned subsidiary of the Company;
(x) make or agree to make any new capital expenditures (exclusive of
expenditures set forth on Schedule 4.1(a)) for tangible physical assets which
in the aggregate exceed $50 million;
(xi) purchase or acquire, or permit or cause any of its subsidiaries to
purchase or acquire, beneficial or record ownership of any shares of Parent
Common Stock;
(xii) except in the ordinary course of business consistent with past
practice, modify, amend, renew, fail to renew or terminate any material
contract or agreement to which the Company or any subsidiary is a party or
waive, release or assign any material rights or claims; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Conduct of Business by Parent. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent shall, and shall cause its
subsidiaries to, use all reasonable efforts to preserve intact their current
business organizations, keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them. Between the date of this
A-24
<PAGE>
Agreement and the Effective Time or until the earlier termination of this
Agreement pursuant to its terms, except (1) as contemplated by this Agreement,
(2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, or (3)
with the prior written consent of the Company, Parent shall not, and shall not
permit any of its subsidiaries to:
(i) (A) declare, set aside or pay (whether in cash, stock, property or
otherwise) any dividends on, or make any other distributions in respect of,
any of its capital stock, other than dividends and distributions by any
direct or indirect wholly owned subsidiary of Parent to its parent, (B)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of Parent or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities; provided, however,
that with respect to clause (C) only, Parent may take such actions in an
aggregate amount not to exceed $50 million in addition to any such actions
taken as required by the proviso in Section 4.1(b)(ii)(C) to offset issuances
of capital stock in an acquisition permitted under Section 4.1(b)(iv);
(ii) (x) issue, deliver, sell, award, pledge, dispose of or otherwise
encumber or authorize or propose the issuance, delivery, grant, sale, award,
pledge or other encumbrance (including limitations in voting rights) or
authorization of, any shares of its capital stock, any voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities, (y)
amend or otherwise modify the terms of any such rights, warrants or options
(except as expressly contemplated by this Agreement) or (z) accelerate the
vesting of any of the stock options in each case other than (A) the issuance
of Parent Common Stock upon the exercise of stock options outstanding under
the Parent Stock Incentive Plan on the date of this Agreement in accordance
with their present terms or in accordance with the present terms of any
employment agreements existing on the date of this Agreement, (B) the grant
of stock options to employees and directors to purchase up to 1,000,000
shares of Parent Common Stock (at an exercise price equal to the fair market
value of the Parent Common Stock on the date of grant) pursuant to the Parent
Stock Incentive Plan as in effect on the date of this Agreement (as the same
may be amended to increase the number of shares of Parent Common Stock which
may be the subject of awards thereunder), and the issuance of Parent Common
Stock upon the exercise thereof, and (C) the issuance of Parent Common Stock
in connection with a transaction not prohibited by Section 4.1(b)(iv);
provided, however, that stock issuances in connection with a transaction
permitted under Section 4.1(b)(iv) hereof may not exceed the number of shares
of Parent Common Stock purchased by the Parent after the date hereof;
(iii) amend its Amended and Restated Articles of Association or Amended
and Restated Memorandum of Association, other than as contemplated by the
Domestication;
(iv) acquire or agree to acquire (for cash or shares of stock or
otherwise) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof; provided, however, that the Parent and its
subsidiaries may enter into such transactions (in addition to those listed on
Schedule 4.1(b)), other than with an affiliate, if the purchase price and
required capital contributions therefore (whether consisting of cash or
Parent Common Stock or a combination of both) do not exceed, in the
aggregate, $200 million (the "Parent Acquisition Basket"), and if such
transactions would not be reasonably likely to prevent or materially delay
the consummation of the Merger;
(v) mortgage or otherwise encumber or subject to any lien (a non-
exclusive license shall not be considered a mortgage, encumbrance or lien),
or sell, lease, exchange or otherwise dispose of any of, its properties or
assets, except for sales of its properties or assets in the ordinary course
of business consistent with past practice or other sales that, exclusive of
the transactions listed on Schedule 4.1(b) of the Parent Disclosure Schedule,
do not exceed, in the aggregate $50 million;
(vi) dispose of, pledge or encumber any of Parent's or its
subsidiaries' intellectual property, except through non-exclusive license
agreements;
A-25
<PAGE>
(vii) change its fiscal year;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Parent or any of
its subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the economic
effect of any of the foregoing, except for (x) indebtedness incurred to
effect a transaction disclosed on Schedule 4.1(b) of the Parent Disclosure
Schedule, (y) indebtedness incurred or assumed in connection with one or more
acquisition transactions permitted under Section 4.1(b)(iv), provided that
indebtedness assumed in connection with any such transaction (as opposed to
indebtedness incurred to effect any such transaction which will be counted
solely against the limitations of Section 4.1(b)(iv)) shall not exceed the
amount that would otherwise be permitted to be incurred pursuant to clause
(z) below plus any remaining balance in the Parent Acquisition Basket, and
(z) indebtedness which when added to existing indebtedness of Parent and its
subsidiaries (other than indebtedness incurred pursuant to clause (x) and
indebtedness incurred or assumed pursuant to clause (y) to the extent that
such indebtedness reduces the available amount in the Parent Acquisition
Basket) does not exceed in the aggregate $50 million, or (B) other than in
the ordinary course of business consistent with past practice and within the
limits specified in Section 4.1(b)(iv), make any loans, advances or capital
contributions to, or investments in, any other person, other than to Parent
or any direct or indirect wholly owned subsidiary of Parent;
(ix) purchase or acquire, or permit or cause any of its subsidiaries to
purchase or acquire, beneficial or record ownership of any shares of Company
Common Stock;
(x) make or agree to make any new capital expenditures (exclusive of
expenditures set forth on Schedule 4.1(b)) for tangible physical assets which
in the aggregate exceed $50 million;
(xi) except in the ordinary course of business consistent with past
practice, modify, amend, renew, fail to renew or terminate any material
contract or agreement to which the Parent or any subsidiary is a party or
waive, release or assign any material rights or claims; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 4.2 No Inconsistent Company Activities.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, the Company agrees that it shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor,
representative or agent of, the Company or any of its subsidiaries to, directly
or indirectly, solicit or initiate, or knowingly encourage the submission of,
any Company Takeover Proposal (as defined below), or participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Company Takeover Proposal or amend or grant any waiver or release of
any standstill agreement. For purposes of this Agreement, "Company Takeover
Proposal" means any proposal (whether or not in writing and whether or not
delivered to the Company's stockholders generally) regarding (i) a merger,
consolidation, purchase of assets (other than purchases of assets or inventory
in the ordinary course of business), tender offer, share exchange or other
business combination or similar transaction involving the Company or any of its
subsidiaries, (ii) any proposal or offer to acquire in any manner, directly or
indirectly, any equity interest in or any voting securities of the Company or
any of its subsidiaries which constitutes 10% or more of the total of such
equity interests or voting securities, or a substantial portion of the assets
of the Company or any of its subsidiaries, (iii) the acquisition by any person
of beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act
and the rules and regulations thereunder) which beneficially owns, or has the
right to acquire beneficial ownership of 10% or more of the then outstanding
shares of capital stock of the Company or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or
A-26
<PAGE>
any agreement to engage in any of the foregoing. Neither the Company nor any of
its subsidiaries shall, directly or indirectly, release any third party from
any confidentiality agreement relating to any transaction of the nature
referred to in the definition of Company Takeover Proposal, as if the
references to 10% therein referred to 1%. Nothing contained herein shall
prohibit the Board of Directors of the Company from complying with Rule 14e-2
and Rule 14d-9 under the Exchange Act with respect to a Company Takeover
Proposal by means of a tender offer.
(b) The Company shall promptly advise Parent orally and in writing of any
request for information or of any Company Takeover Proposal, or any inquiry
with respect to or which could lead to any Company Takeover Proposal, the
material terms and conditions of such request, Company Takeover Proposal or
inquiry, and the identity of the person making any such Company Takeover
Proposal or inquiry. The Company shall keep Parent informed of the status and
details of any such request, Company Takeover Proposal or inquiry.
(c) The Company shall not provide any non-public information to a third
party unless the Company provides such non-public information pursuant to a
non-disclosure agreement with terms regarding the protection of confidential
information at least as restrictive as such terms in the Confidentiality
Agreements (as defined in Section 5.2 hereof) previously entered into between
Parent and the Company. The Company shall be entitled to provide copies of this
Section 4.2 to third parties who, on an unsolicited basis after the date of
this Agreement, contact the Company regarding a Company Takeover Proposal,
provided that Parent shall concurrently be notified of such contact and
delivery of such copy.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Sub) conducted prior to the date of this Agreement with respect to any of the
foregoing.
Section 4.3 No Inconsistent Parent Activities.
(a) In light of the consideration given by the Board of Directors of Parent
prior to the execution of this Agreement to, among other things, the
transactions contemplated hereby, the strategic benefits associated with the
Merger and the settlement of pending litigation between the parties hereto that
will result from the Merger, and in light of Parent's representations contained
in Section 3.2(n), from and after the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement in accordance with
its terms, Parent agrees that it shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor,
representative or agent of, Parent or any of its subsidiaries to, directly or
indirectly, solicit or initiate, or knowingly encourage the submission of, any
Parent Takeover Proposal (as defined below), or participate in any discussions
or negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the making
of, any proposal that constitutes, or may reasonably be expected to lead to,
any Parent Takeover Proposal, or amend or grant any waiver or release of any
standstill agreement or approve any termination or amendment of the Parent
Rights Agreement (as defined below) or redemption of rights thereunder (other
than as contemplated by Section 5.10 hereof). For purposes of this Agreement,
"Parent Takeover Proposal" means any proposal (whether or not in writing and
whether or not delivered to Parent's stockholders generally) regarding (i) a
merger, consolidation, purchase of assets (other than purchases of assets or
inventory in the ordinary course of business), tender offer, share exchange or
other business combination or similar transaction involving Parent or any of
its subsidiaries, (ii) the acquisition in any manner, directly or indirectly,
of any equity interest in or any voting securities of Parent or any of its
subsidiaries which constitutes 10% or more of the total of such equity
interests or voting securities, or a substantial portion of the assets of
Parent or any of its subsidiaries, (iii) the acquisition by any person of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act
and the rules and regulations thereunder) which beneficially owns, or has the
right to acquire beneficial ownership of, 10% or more of the then outstanding
shares of capital stock of Parent, or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing. Neither Parent nor any of its subsidiaries
shall, directly or indirectly, release any third party from any
A-27
<PAGE>
confidentiality agreement relating to any transactions of the nature referred
to in the definition of Parent Takeover Proposal, as if the reference to 10%
therein referred to 1%. Nothing contained in this Agreement shall prevent the
Board of Directors of Parent from complying with Rule 14e-2 and Rule 14d-9
under the Exchange Act with respect to a Parent Takeover Proposal; provided,
however, that the Board of Directors of Parent will not recommend a Parent
Takeover Proposal unless it determines by a majority vote in its good faith
judgment (on the basis of the written advice of Parent's outside legal counsel)
that it must recommend a Parent Superior Proposal (as defined below) to comply
with its fiduciary duties under applicable law.
(b) The restrictions set forth in Section 4.3(a) shall not prevent the Board
of Directors of Parent (or any officer, director or employee of, or any
investment banker, attorney or other advisor, representative or agent, of
Parent) in the exercise of and as required by its fiduciary duties as
determined by the Board of Directors of Parent in good faith (after
consultation with and not inconsistent with the advice of Parent's outside
legal counsel) from engaging in discussions or negotiations with (but not
directly or indirectly soliciting or initiating such discussions or
negotiations or directly or indirectly encouraging inquiries or the making of
any Parent Takeover Proposal), and furnishing information concerning Parent and
its business, properties and assets to, a third party who makes a written,
unsolicited, bona fide Parent Takeover Proposal (except that for purposes of
this Section 4.3(b), to constitute a Parent Takeover Proposal such proposal,
(x) if relating to the acquisition in any manner of any equity interest in or
any voting securities of Parent or any of its subsidiaries, must contemplate
the acquisition of 50% or more, rather than 10% or more, of the total of such
equity interests or voting securities and (y) if relating to the acquisition by
any person in any manner of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of,
outstanding shares of capital stock of Parent, must contemplate the acquisition
of 50% or more, rather than 10% or more, of the then outstanding shares of
capital stock of Parent) that, after taking into consideration the strategic
benefits to Parent of the Merger and the termination of the Subject Litigation
(as defined below) that will result from the Merger, (A) is financially
superior to the Merger, as determined in good faith by Parent's Board of
Directors after consultation with, and the receipt of an opinion from, Parent's
financial advisors, which shall be of national reputation and (B) will
constitute a transaction for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
Parent, is reasonably capable of being obtained (any such Parent Takeover
Proposal satisfying both clauses (A) and (B) above is herein referred to as a
"Parent Superior Proposal"); provided that in advance of the taking of any such
actions by Parent the Company shall have been notified in writing of such
Parent Superior Proposal and given a copy of such Parent Superior Proposal.
(c) Parent shall provide the Company (for at least five business days
following the receipt of such notice) an opportunity to amend this Agreement to
provide for terms and conditions no less favorable than the Parent Superior
Proposal in which event Parent shall cause its respective financial and legal
advisors to negotiate in good faith with the Company to make such adjustments
to the terms and conditions of this Agreement as would enable Parent to proceed
with the transactions contemplated hereby. The provisions of this paragraph
shall apply to successive Parent Superior Proposals (provided that each such
Parent Superior Proposal shall meet the then applicable requirements thereof,
based upon the terms of this Agreement in effect on the date hereof or as such
terms shall be modified, amended or superseded).
(d) Parent shall promptly advise the Company orally and in writing of any
request for information or of any Parent Takeover Proposal, or any inquiry with
respect to or which could lead to any Parent Takeover Proposal, the material
terms and conditions of such request, Parent Takeover Proposal or inquiry, and
the identity of the person making any such Parent Takeover Proposal or inquiry.
Parent shall keep the Company informed of the status and details of any such
request, Parent Takeover Proposal or inquiry.
(e) Notwithstanding Section 4.3(b), Parent shall not provide any non-public
information to a third party unless Parent provides such non-public information
pursuant to a non-disclosure agreement with terms regarding the protection of
confidential information at least as restrictive as such terms in the
Confidentiality
A-28
<PAGE>
Agreements (as defined in Section 5.2 hereof) previously entered into between
Parent and the Company. Parent shall be entitled to provide copies of this
Section 4.3 to third parties who, on an unsolicited basis after the date of
this Agreement, contact Parent regarding a Parent Takeover Proposal, provided
that the Company shall concurrently be notified of such contact and delivery
of such copy.
(f) Parent shall immediately cease and cause to be terminated any existing
discussion or negotiations with any parties (other than the Company) conducted
prior to the date of this Agreement with respect to any of the foregoing and
will exercise its rights under any confidentiality agreements with any such
parties to require the return of confidential information provided by Parent
or its representatives to any such parties.
ARTICLE V
Additional Agreements
Section 5.1 Preparation of Form S-4 and the Proxy Statement; Other Filings;
Stockholders' Meetings.
(a) As promptly as reasonably practicable after the execution of this
Agreement, (i) the Company and Parent shall prepare and file with the SEC a
preliminary joint proxy statement in form and substance satisfactory to each
of the Company and Parent, relating to the meeting of the Company's
stockholders to be held to obtain the Company Stockholder Approval and the
meeting of the Parent's Stockholders to obtain the Parent Stockholder
Approvals (together with any amendments thereof or supplements thereto, the
"Proxy Statement") and (ii) Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Form S-4") in which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of shares of Parent
Common Stock in connection with the transactions and matters contemplated
hereby. As promptly as reasonably practicable after the date of this
Agreement, Parent and the Company shall prepare and file any other filings
required under the Exchange Act, the Securities Act or any other Federal or
Blue Sky Laws relating to the Merger and the transactions contemplated by this
Agreement (the "Other Filings"). Each of Parent and the Company will notify
the other promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff or any other government officials
for amendments or supplements to the Form S-4, the Proxy Statement or any
Other Filing or for additional information and will supply the other with
copies of all correspondence between such company or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Form S-4, the
Proxy Statement, the Merger or any Other Filing. The Proxy Statement, the Form
S-4 and the Other Filings shall comply in all material respects with all
applicable requirements of law. Each of Parent and the Company shall use all
reasonable efforts to cause the Form S-4 to become effective as promptly as
reasonably practicable, and shall take all or any action required under any
applicable federal or state securities laws in connection with the issuance of
shares of Parent Common Stock pursuant to the Merger. The Company authorizes
Parent to utilize in the Form S-4 and in all such state filed materials, the
information concerning the Company and its subsidiaries provided to Parent in
connection with, or contained in, the Proxy Statement. Parent promptly will
advise the Company when the Form S-4 has become effective and of any
supplements or amendments thereto, and the Company shall not distribute any
written material that would constitute, as advised by counsel to the Company,
a "prospectus" relating to the Merger or the Parent Common Stock within the
meaning of the Securities Act or any applicable state securities law without
the prior written consent of Parent. As promptly as reasonably practicable
after the Form S-4 shall have become effective, each of the Company and Parent
shall mail the Proxy Statement to its respective stockholders.
(b) Parent agrees promptly to advise the Company if at any time prior to
the meeting of the Parent's Stockholders or the meeting of the Company's
stockholders any information provided by it in the Proxy Statement is or
becomes incorrect or incomplete in any material respect and to provide the
Company with the information needed to correct such inaccuracy or omission.
Parent will furnish the Company with such supplemental information as may be
necessary in order to cause the Proxy Statement, insofar as it relates to
A-29
<PAGE>
Parent and its subsidiaries, to comply with applicable law after the mailing
thereof to the Parent's Stockholders or the Company's stockholders.
(c) Each of Parent and the Company agrees that none of the information
supplied or to be supplied by it specifically for inclusion or incorporation by
reference in (i) the Form S-4 shall, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading or (ii) the Proxy Statement shall, at the
date it is first mailed to the Company's stockholders or the Parent's
stockholders or at the time of the Company Stockholders' Meeting (as defined
below) or the Parent Stockholders' Meeting (as defined below), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(d) The Company agrees promptly to advise Parent if at any time prior to the
meeting of the Parent's Stockholders or the meeting of the Company's
stockholders any information provided by it in the Proxy Statement is or
becomes incorrect or incomplete in any material respect and to provide Parent
with the information needed to correct such inaccuracy or omission. The Company
will furnish Parent with such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to the Company and
its subsidiaries, to comply with applicable law after the mailing thereof to
the Parent's Stockholders or the Company's stockholders.
(e) As soon as reasonably practicable following the date of this Agreement,
the Company shall call and hold a meeting of its stockholders (the "Company
Stockholders' Meeting") and the Parent shall call and hold a meeting of
Parent's Stockholders (the "Parent Stockholders' Meeting"). The purpose of such
meetings shall be to obtain the Company Stockholder Approval and the Parent
Stockholder Approvals, respectively. Each of the Company and Parent shall
coordinate and cooperate with respect to the timing of the Company
Stockholders' Meeting and Parent Stockholders' Meeting and shall use reasonable
efforts to hold such meetings on the same day. Each of the Company and Parent
shall use its best efforts to solicit from its stockholders proxies, and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders required by applicable law or otherwise to obtain the Company
Stockholder Approval and the Parent Stockholder Approvals, respectively, and
through its respective Board of Directors, shall recommend to its respective
stockholders the obtaining of the Company Stockholder Approval and the Parent
Stockholder Approvals, respectively; provided, however, that the recommendation
of the Board of Directors of Parent may not be included or may be withdrawn or
modified if previously included if but only if a Parent Superior Proposal has
been made and Parent is in compliance with the provisions of Section 4.3(b) and
Section 4.3(c). Unless this Agreement is previously terminated in accordance
with Article 7, Parent shall submit the issuance of Parent Common Stock
pursuant to the terms of this Agreement and the Domestication to a vote of its
stockholders at the Parent Stockholders' Meeting even if the Board of Directors
of Parent determines at any time after the date hereof that the Merger is no
longer advisable and withdraws its recommendation that Parent Stockholders
approve such transaction.
Section 5.2 Access to Information; Confidentiality. The Company shall, and
shall cause each of its respective subsidiaries to, afford to Parent, and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent, reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause each of its respective subsidiaries to,
furnish promptly to Parent, (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Parent will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisers and other representatives and
affiliates to hold, any confidential information confidential in accordance with
the Confidentiality Agreements between Parent and the Company (the
"Confidentiality Agreements").
A-30
<PAGE>
Section 5.3 Appropriate Action; Consents; Filings.
(a) Without limiting the obligations of the parties in Section 5.3(b), each
of the parties hereto shall (i) make promptly its respective filings, and
thereafter make any other required submissions under the HSR Act with respect to
the transactions contemplated herein and (ii) make promptly all filings with or
applications to the FCC with respect to the transactions contemplated herein.
The parties hereto will use their respective best efforts, and will take all
actions necessary, to consummate and make effective the transactions
contemplated herein and to cause the conditions to the Merger set forth in
Article VI to be satisfied, (including using best efforts, and taking all
actions necessary, to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Entities as
are necessary for the consummation of the transactions contemplated herein), and
will do so in a manner designed to obtain such regulatory clearances and the
satisfaction of such conditions as expeditiously as possible.
(b) The Company and Parent each agree to take promptly any and all steps
necessary to avoid or eliminate each and every impediment and obtain all
consents or waivers under any antitrust, competition, communications or
broadcast law that may be asserted by any U.S. federal, state and local and non-
United States antitrust or competition authority, or by the FCC or similar
authority, so as to enable the parties to close the transactions contemplated by
this Agreement as expeditiously as possible, including committing to or
effecting, by consent decree, hold separate orders, trust, or otherwise, the
sale or disposition of such of its assets or businesses as are required to be
divested in order to obtain the consent of the FCC to or avoid the entry of, or
to effect the dissolution of, any decree, order, judgment, injunction, temporary
restraining order or other order in any suit or proceeding, that would otherwise
have the effect of preventing or materially delaying the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that neither the Company, Parent nor any of their respective
subsidiaries shall be required to divest assets on which their respective
electronic program guide businesses are dependent if such divestiture would have
a material adverse effect on their electronic program guide business or take any
other action that materially and adversely impacts their respective abilities to
participate in the electronic program guide business. In addition, each of the
Company and Parent agree to take promptly any and all steps necessary to obtain
any consent or to vacate or lift any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental Entity
(each, an "Order") relating to antitrust or communications matters that would
have the effect of making any of the transactions contemplated by this Agreement
illegal or otherwise prohibiting or materially delaying their consummation.
Notwithstanding the above, Parent and the Company shall not be obligated to take
any action pursuant to the foregoing if the board of directors of each of Parent
and the Company determine that the taking of such action is reasonably likely to
have a material adverse effect on the economic or business benefits of the
transactions contemplated by this Agreement.
(c) Each of the Company and Parent shall give (or shall cause its respective
subsidiaries to give) any notices to third parties, and the Company and Parent
shall use, and cause each of its subsidiaries to use, its reasonable best
efforts to obtain any third party consents, necessary, proper or advisable to
consummate the Merger. Each of the parties hereto will furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with the preparation of any required governmental filings or
submissions and will cooperate in responding to any inquiry from a Governmental
Entity, including immediately informing the other party of such inquiry,
consulting in advance before making any presentations or submissions to a
Governmental Entity, and supplying each other with copies of all material
correspondence, filings or communications between either party and any
Governmental Entity with respect to this Agreement.
Section 5.4 Stock Options.
(a) At the Effective Time, each outstanding Company Stock Option, whether
vested or unvested, shall be assumed by Parent. Accordingly, each Company Stock
Option shall be deemed to constitute an option to acquire, on substantially the
same terms and conditions as were applicable under such Company Stock Option,
the number, rounded down to the nearest whole integer, of full shares of Parent
Common Stock the holder of
A-31
<PAGE>
such Company Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such Company Stock Option in full, including
as to unvested shares, immediately prior to the Effective Time, at a price per
share equal to (y) the exercise price per share for the shares of Company
Common Stock otherwise purchasable pursuant to such Company Stock Option
divided by (z) the Exchange Ratio, with such exercise price per share rounded
up to the nearest whole cent (except that all vesting periods with respect to
Company Stock Options granted prior to January 1, 1999 and 200,000 Company
Stock Options granted to each of Peter Boylan and Joe Kiener on or after
January 1, 1999 shall accelerate and such Company Stock Options will remain
exercisable for the balance of their term).
(b) As soon as practicable after the Effective Time, Parent shall deliver to
each holder of a Company Stock Option a document evidencing the foregoing
assumption of such Company Stock Option by Parent.
(c) As soon as practicable after the Effective Time, Parent shall file a
registration statement on Form S-8 (or any successor form), or another
appropriate form with respect to the shares of Parent Common Stock subject to
such Company Stock Options. With respect to those individuals who subsequent to
the Merger will be subject to the reporting requirements under Section 16(a) of
the Exchange Act, where applicable, Parent shall administer the Company Stock
Option Plans assumed pursuant to this Section 5.4 in a manner that complies
with Rule 16b-3 promulgated by the SEC under the Exchange Act.
(d) Parent will grant options for up to 300,000 shares of Parent Common
Stock following the Effective Time to certain senior officers (other than Peter
Boylan and Joe Kiener) who were senior officers of the Company with an exercise
price equal to the then current market price of shares of Parent Common Stock
in accordance with the recommendations of the Company's current directors
provided to the Parent Compensation Committee; provided, however, that without
the approval of the Parent Compensation Committee, (i) no single officer may be
granted options to purchase more than 30,000 shares of Parent Common Stock, and
(ii) officers employed by the following divisions of the Company may not be
granted options for more than 75,000 shares of Parent Common Stock in the
aggregate for each such division: TV Guide Magazine, Super Star and UVTV.
(e) Parent and the Company hereby agree to provide the other with the
following promptly upon the written request of such other party, but in no
event more frequently than once a month: (i) the number of shares of Parent
Common Stock or Company Common Stock, as the case may be, repurchased after
September 30, 1999 and prior to the Closing in accordance with the proviso in
Section 4.1(a)(ii)(E) or the proviso in Section 4.1(b)(ii)(C), as the case may
be, and (ii) the number of shares of Parent Common Stock or Company Common
Stock, as the case may be, issued after September 30, 1999 and prior to the
Closing.
Section 5.5 Conveyance Taxes. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time. All of such taxes and
expenses shall be borne equally by Parent and the Company.
Section 5.6 Indemnification and Insurance.
(a) The certificate of incorporation and the bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability substantially identical to those set forth in the
Company's certificate of incorporation and bylaws on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
unless such modification is required by law.
(b) If Parent, the Surviving Corporation or any of their successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such
A-32
<PAGE>
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 5.6.
Section 5.7 Fees and Expenses. Except as provided in Section 7.5, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except that those expenses, other than
attorneys' and accountants' fees and expenses, incurred in connection with
printing the Proxy Statement and Form S-4, as well as the filing fee relating to
the Proxy Statement and Form S-4 paid to the SEC, will be shared equally by
Parent and the Company. Parent and the Company shall share equally the fees
incurred in connection with the filing of the premerger notification and report
form pursuant to the HSR Act.
Section 5.8 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or association.
Section 5.9 Takeover Statutes. If any "takeover" statute shall become
applicable to the transactions contemplated hereby, each of the Company, the
members of the Board of Directors of the Company, Parent and the Board of
Directors of Parent, subject to fiduciary duties, shall grant such approvals and
take such actions as are necessary such that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to eliminate or minimize the effects of such takeover
statute on the transactions contemplated hereby.
Section 5.10 Rights Agreement. The Board of Directors of Parent has taken
all action necessary to render the Rights Agreement, dated July 10, 1998, by and
between Parent and American Stock Transfer & Trust Company (the "Parent Rights
Agreement") inapplicable to the Merger and the other transactions contemplated
by this Agreement. Prior to the Effective Time, Parent shall either (i) amend
the Parent Rights Agreement in the form attached hereto as Exhibit 5.10, or (ii)
adopt a new shareholders' rights agreement identical to the Parent Rights
Agreement, except as amended to reflect the fact that Parent is then a Delaware
corporation and to reflect the amendments reflected in the form attached hereto
as Exhibit 5.10, in each case immediately prior to the Effective Time. Such
amendment or new shareholders' rights agreement is referred to herein as the
"Parent Rights Agreement Amendment."
Section 5.11 Nasdaq National Marketing Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock issuable to the stockholders
of the Company in the Merger, and those required to be reserved for issuance in
connection with the Merger, to be listed for trading on the Nasdaq National
Market.
Section 5.12 Board of Directors of Parent. The Board of Directors of Parent
will take all actions necessary to cause the Board of Directors of Parent,
immediately after the Effective Time, to consist of twelve persons, six of whom
shall be designated by Parent (one of whom shall be Henry C. Yuen and two of
whom shall be Independent Directors (as that term is defined in the Bylaws of
Parent)), and six of whom shall be designated by the Board of Directors of the
Company prior to the Effective Time (one of whom shall be Peter Boylan, one of
whom shall be Joe Kiener, and two of whom shall be Independent Directors (as
that term is defined in the Bylaws of Parent)). If, prior to the Effective Time,
any of Parent or the Company designees shall decline or be unable to serve as a
director, Parent (if such person was designated by Parent) or the Company (if
such person was designated by the Company) shall designate another person to
serve in such person's stead.
Section 5.13 Committees of the Board of Directors of Parent. The Board of
Directors of Parent will take all actions necessary to cause the following
committees of the Board of Directors of Parent to be formed, immediately after
the Effective Time:
A-33
<PAGE>
(a) An executive committee comprised of four directors consisting of the
Chairman and Chief Executive Officer of Parent, the Chief Financial Officer
of Parent, one director designated by Liberty, and one director designated by
News Corp.
(b) A compensation committee comprised of five members of the Board of
Directors of Parent which will consist of two Independent Directors (as that
term is defined in the Bylaws of Parent) designated by Parent, one
Independent Director (as that term is defined in the Bylaws of Parent)
designated by Liberty, one Independent Director (as that term is defined in
the Bylaws of Parent) designated by News Corp. and the Chairman and Chief
Executive Officer of Parent.
(c) A special committee consisting of three members of the Board of
Directors of Parent which will be established and will be empowered to
determine issues related to Parent's relationship with and among service
providers. The members of the special committee will consist of the Chairman
and Chief Executive Officer of Parent, a director designated by Liberty and a
director designated by News Corp.
(d) An audit committee comprised of the Chief Financial Officer of
Parent, one Independent Director (as that term is defined in the Bylaws of
Parent) designated by Parent and two Independent Directors (as that term is
defined in the Bylaws of Parent) one of whom shall be designated by Liberty
and one of whom shall be designated by News Corp.
Section 5.14 Tax Matters.
(a) This Agreement is intended to constitute a "reorganization" within
the meaning of Section 368(a) of the Code.
(b) If required by the SEC, the Company shall cause its counsel, Baker &
Botts, L.L.P., to deliver an opinion to the Company, dated the date of the
Proxy Statement, to the effect that the Merger will qualify for federal
income tax purposes as a "reorganization" within the meaning of Section
368(a) of the Code. In connection with obtaining such opinions, the Company
and Parent shall provide to such counsel customary representation letters
upon which counsel may rely in rendering such opinion. The opinion shall, if
requested, be filed with the SEC as part of the Proxy Statement.
(c) If required by the SEC, Parent shall cause its counsel, O'Melveny &
Myers, LLP, to deliver an opinion to Parent, dated the date of the Proxy
Statement, to the effect that the Merger will qualify for federal income tax
purposes as a "reorganization" within the meaning of Section 368(a) of the
Code. In connection with obtaining such opinions, Parent and the Company
shall provide to such counsel customary representation letters upon which
counsel may rely in rendering such opinion. The opinion shall, if requested,
be filed with the SEC as part of the Proxy Statement.
(d) Between the date of this Agreement and the Effective Time, neither
Parent nor Company nor their affiliates shall directly or indirectly take any
action that could prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code or that could prevent each of them from
providing representations required from them in connection with obtaining the
opinions specified in Sections 5.14(b) and (c) hereof.
(e) Neither Parent nor Company shall (without the consent of the other)
take any action, except as specifically contemplated by this Agreement, that
could adversely affect the intended tax treatment of the transactions
contemplated hereby.
Section 5.15 Domestication; Certificates and Other Deliveries.
(a) On or prior to the Closing Date, the Company shall have delivered, or
caused to be delivered, to Parent (i) a certificate of good standing from the
Secretary of State of Delaware and of comparable authority in other
jurisdictions in which the Company and its subsidiaries are incorporated or
qualified to do business stating that each is a validly existing corporation in
good standing; (ii) duly adopted resolutions of the Board of Directors and
stockholders of the Company approving the execution, delivery and performance
of this
A-34
<PAGE>
Agreement and the Company Ancillary Agreements and the instruments contemplated
hereby, certified by the Secretary of the Company, and (iii) a true and complete
copy of the certificate of incorporation or comparable governing instruments, as
amended, of the Company and its subsidiaries certified by the Secretary of State
of the state of incorporation or comparable authority in other jurisdictions,
and a true and complete copy of the bylaws or comparable governing instruments,
as amended, of the Company and its subsidiaries certified by the Secretary of
the Company and its subsidiaries, as applicable.
(b) On or prior to the Closing Date, Parent shall have effected the
Domestication and delivered to the Company (i) a good standing certificate from
the Secretary of State of Delaware stating that Parent is a validly existing
corporation together with a certificate of good standing from the Secretary of
State of Delaware stating that Sub is a validly existing corporation in good
standing; (ii) duly adopted resolutions of the Board of Directors of each of
Parent and Sub approving the execution, delivery and performance of this
Agreement and the Parent Ancillary Agreements and the instruments contemplated
hereby, and of the stockholders of Parent approving the issuance of the Parent
Common Stock pursuant to the Merger, each certified by the Secretary or the
Assistant Secretary of the Company; (iii) a true, complete and certified copy of
the Certificate of Incorporation of Parent, which shall be in the form attached
to this Agreement and a true, complete and certified copy of the Certificate of
Incorporation of Sub; and (iv) a true and complete copy of Parent's Bylaws which
shall be in the form attached to this Agreement and a true and complete copy of
the Bylaws, as amended, of Sub, each certified by the Secretary or Assistant
Secretary of Parent and Sub, as applicable.
Section 5.16 Pending Litigation. Each of the parties covenants and agrees
that all activity (except as contemplated by this Section 5.16) with respect to
the pending litigation between and among the parties and their respective
affiliates (the "Subject Litigation") shall cease until the earlier of (i) the
termination of this Agreement pursuant to Section 7.1 hereof, and (ii) the
Effective Time. Each of the parties hereto agrees to take promptly any and all
action required and to file appropriate documents with each court (the "Relevant
Courts") in which the Subject Litigation is pending to inform the court of this
Section 5.16 and to request the stay of the Subject Litigation. Upon any
termination of this Agreement pursuant to Section 7.1, unless the IPG License
Agreement is effective, the stay implemented in connection with the Subject
Litigation pursuant to this Section 5.16 shall be deemed automatically lifted
and each of the parties hereto agrees to take promptly any and all actions
required and to file appropriate documents with the Relevant Courts to lift the
stay. The parties shall immediately and expeditiously as possible, following the
execution of this Agreement, take all necessary steps to execute and file with
the Relevant Courts the documents contemplated by this Section 5.16.
Section 5.17 IPG License Agreement. In the event this Agreement is
terminated pursuant to Section 7.1(b), (d), (e) or (g), the IPG License
Agreement (the "IPG License Agreement") entered into on the date hereof by
Parent and the Company in the form attached hereto as Exhibit 5.17, shall become
effective as of the date on which this Agreement is so terminated if the Company
so elects by giving notice to Parent within 30 days thereafter.
Section 5.18 Rule 16b-3. Prior to the Effective Time, Parent and the
Company shall take all steps reasonably necessary to cause the transactions
contemplated hereby and any other dispositions of equity securities of the
Company (including derivative securities) or acquisition of Parent and the
Company equity securities (including derivative securities) in connection with
this Agreement and the Option Agreement by each person who (a) is a director or
officer of Parent or the Company or (b) at the Effective Time, will become a
director or officer of Parent, to be exempted under Rule 16b-3 promulgated under
the Exchange Act.
Section 5.19 Multichannel Video Programming. Following the date hereof, the
Company shall enter into good faith negotiations with each multichannel video
programming delivery ("MVPD") system in which News Corp. or its affiliates has
an interest (each a "News MVPD") for the purpose of licensing the Company's IPG
technology on commercial terms and conditions and News Corp. shall cause each
such News MVPD to enter into good faith negotiations with the Company for the
purpose of licensing the Company's IPG technology on commercial terms and
conditions.
A-35
<PAGE>
ARTICLE VI
Conditions Precedent
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. The Stockholder Approvals shall have been
obtained;
(b) Nasdaq National Market Listing. The shares of Parent Common Stock
issuable to the Company's stockholders pursuant to this Agreement shall have
been approved for inclusion on the Nasdaq National Market, subject to
official notice of issuance;
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger substantially on the terms contemplated hereby
shall be in effect;
(d) Form S-4. The Form S-4 shall have been declared effective by the SEC
under the Securities Act. No stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC, and no proceedings for that
purpose shall have been initiated or, to the knowledge of Parent or the
Company, threatened by the SEC; and
(e) HSR Act. The applicable waiting period (and any extension thereof)
under the HSR Act shall have expired or been terminated.
Section 6.2 Additional Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are also subject to the
following conditions, unless waived in writing by Parent:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct as of the date hereof, except, in all such cases, where the failure
to be so true and correct would not have a material adverse effect on the
Company;
(b) Agreements and Covenants. The Company shall not have willfully and
materially breached (i) any of the covenants specified in Section 4.1(a)(i)
through (xiii), inclusive, or Sections 5.5 or 5.8, except, in all such cases,
where the failure to have so performed or complied would not have a material
adverse effect on the Company or (ii) any covenant in Section 4.2 or Article
V (other than Sections 5.5 and 5.8) required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(c) Company Ancillary Documents. The Company Ancillary Agreements shall
be valid, binding and enforceable pursuant to the terms thereof and hereof
against the Company and its applicable subsidiaries, Liberty and News Corp.,
as the case may be; and
(d) Share Ownership. The holders of Parent's outstanding Parent Common
Stock immediately prior to the Closing shall own in the aggregate more than
50% of Parent's outstanding Parent Common Stock immediately following the
Closing, provided that for purposes of such calculation, (i) Parent must use
the number of issued and outstanding shares of Parent Common Stock on
September 30, 1999 specified in Section 3.2(c) of this Agreement plus any
shares of Parent Common Stock issued after September 30, 1999 and prior to
the Closing, (ii) any shares of Parent Common Stock purchased by Parent or
any person controlled by Parent after September 30, 1999 (other than shares
of Parent Common Stock repurchased in accordance with the proviso in Section
4.1(b)(ii)(C)) shall be deemed to be outstanding immediately following the
Closing, and (iii) any shares of Parent Common Stock repurchased after
September 30, 1999 in accordance with the proviso in Section 4.1(b)(ii)(C)
shall be deemed to be outstanding until the tenth business day following the
receipt by the Company of written notice from Parent containing the date of
any such repurchase and the number of shares of Parent Common Stock so
repurchased.
A-36
<PAGE>
Section 6.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are also subject to the
following conditions, unless waived in writing by the Company:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Sub contained in this Agreement shall be true and
correct as of the date hereof, except, in all such cases, where the failure
to be so true and correct would not have a material adverse effect on Parent
and its subsidiaries taken as a whole;
(b) Agreements and Covenants. Each of Sub and Parent shall not have
willfully and materially breached (i) any of the covenants specified in
Section 4.1(b)(i) through (xii), inclusive, or Sections 5.5 and 5.8, except,
in all such cases, where the failure to have so performed or complied would
not have a material adverse effect on Parent and its subsidiaries taken as a
whole or (ii) any covenant in Section 4.3 or Article V (other than Sections
5.5 and 5.8) required by this Agreement to be performed or complied with by
it on or prior to the Closing Date; and
(c) Parent Ancillary Agreements. The Parent Ancillary Agreements shall
be valid, binding and enforceable pursuant to the terms thereof and hereof
against Parent, its applicable subsidiaries and Henry C. Yuen, as the case
may be; provided, however, that if Henry C. Yuen dies prior to the Effective
Time, it shall not be a condition to the Company's obligations to effect the
Merger that the Yuen Amendment and the Stockholders' Agreement be binding and
enforceable upon Henry C. Yuen, as long as the Stockholders' Agreement
continues to be binding and enforceable upon Parent and its applicable
subsidiaries. The Yuen Employment Agreement as amended by the Yuen Amendment
shall not have been amended, modified or supplemented in any manner.
ARTICLE VII
Termination, Amendment and Waiver
Section 7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company or of Parent:
(a) by mutual written consent of Parent and the Company, if the Board of
Directors of each so determines by the affirmative vote of a majority of the
members of its entire Board of Directors; or
(b) by either Parent or the Company, if the Merger shall not have
occurred by March 31, 2000, provided that if as of such date the waiting
period (or any extension thereof) under the HSR Act has not expired or been
terminated, or an action has been instituted by the Department of Justice or
Federal Trade Commission challenging or seeking to enjoin the consummation of
the Merger and remains unresolved, then such date shall be extended to
September 30, 2000 (whichever date is operative being the "Reference Date"),
and provided further that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure to
act has been the cause of or resulted in the failure of the Merger to occur
on or before the Reference Date and such action or failure to act constitutes
a breach of this Agreement; or
(c) by Parent (provided that Parent is not then in material breach of any
representation, warranty, covenant or other agreement contained herein such
that such breach would have a material adverse effect on Parent or the
Company), but only if the conditions set forth in Section 6.2(a), Section
6.2(b), Section 6.2(c) or Section 6.2(d), as the case may be, would be
incapable of being satisfied by the Reference Date; or
(d) by the Company (provided that the Company is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein such that such breach would have a material adverse effect on the
Company or Parent), but only if the conditions set forth in Section 6.3(a) or
Section 6.3(b) or Section 6.3(c), as the case may be, would be incapable of
being satisfied by the Reference Date, including, without limitation, as a
result of the recommendation of the Merger of the Board of Directors of
A-37
<PAGE>
Parent having been withdrawn or modified prior to the termination of this
Agreement other than as permitted by Section 5.1(a); or
(e) by either Parent or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently enjoining, restraining or otherwise
prohibiting the consummation of the Merger and such order, decree or ruling
or other action shall have become final and nonappealable; or
(f) by either Parent or the Company if any approval of the stockholders
of the Company required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of the Company's stockholders or at any adjournment or
postponement thereof, provided that the right to terminate this Agreement
under this Section 7.1(f) shall not be available to the Company where the
failure to obtain stockholder approval of the Company's stockholders shall
have been caused by the action or failure to act of the Company in breach of
this Agreement; or
(g) by either Parent or the Company if any approval of the Parent's
Stockholders required for the consummation of the Merger and the
Domestication shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of Parent's Stockholders or at any
adjournment or postponement thereof, provided that the right to terminate
this Agreement under this Section 7.1(g) shall not be available to Parent
where the failure to obtain the approval of the Parent's Stockholders shall
have been caused by the action or failure to act of Parent in breach of this
Agreement.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except (i) as set forth in Section 5.7, Section 5.17,
this Section 7.2, Section 7.5 and Article VIII (General Provisions), each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any willful and material breach of
this Agreement. No termination of this Agreement shall affect the obligations of
the parties contained in the Confidentiality Agreements, all of which
obligations shall survive termination of this Agreement in accordance with their
terms.
Section 7.3 Amendment. This Agreement may be amended prior to the Effective
Time by the parties at any time before or after approval hereof by the
stockholders of the Company and Parent; provided, however, that after such
stockholder approval there shall not be made any amendment that by law requires
further approval by the stockholders of the Company or Parent without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
Section 7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing, signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 7.5 Termination Fee; Liquidated Damages.
(a) Upon any termination of this Agreement by Parent pursuant to Section
7.1(c) or by Parent or the Company pursuant to Section 7.1(f) hereof, the
Company shall immediately pay to Parent $409 million (the "Company Termination
Fee") by wire transfer of immediately available funds to an account designated
by Parent.
A-38
<PAGE>
(b) Upon any termination of this Agreement by the Company or Parent pursuant
to Section 7.1(g) hereof, Parent shall pay to the Company $205 million (the
"Parent Termination Fee") by wire transfer of immediately available funds to an
account designated by the Company; provided, however, that an additional amount
shall be paid as liquidated damages, under the following circumstances: (i) if
prior to the meeting of Parent's Stockholders there shall have been a Parent
Takeover Proposal (except that for purposes of this Section 7.5(b)(i), to
constitute a Parent Takeover Proposal such proposal, (x) if relating to the
acquisition in any manner of any equity interest in or any voting securities of
Parent or any of its subsidiaries, must contemplate the acquisition of 35% or
more, rather than 10% or more, of the total of such equity interests or voting
securities and (y) if relating to the acquisition by any person in any manner of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) which beneficially owns, or has the right
to acquire beneficial ownership of, outstanding shares of capital stock of
Parent, must contemplate the acquisition of 35% or more, rather than 10% or
more, of the then outstanding shares of capital stock of Parent) or the
recommendation of the Merger of the Board of Directors of Parent shall have been
withdrawn or modified prior to the time of such termination or the meeting of
Parent's Stockholders, Parent shall pay to the Company upon such termination by
wire transfer of immediately available funds an additional fee of $204 million;
and (ii) if at any time within 12 months following such termination of this
Agreement (whether or not a Parent Takeover Proposal (as defined in Section
4.3(a)) was made prior to such termination), Parent enters into a definitive
agreement for or consummates a transaction that if proposed prior to termination
would have constituted a Parent Takeover Proposal (as defined in Section 4.3(a))
then Parent shall concurrently with such signing or closing pay the Company by
wire transfer of immediately available funds, an additional $204 million but
without in any case duplication of any payment made under clause (i). Upon any
termination of this Agreement by the Company pursuant to Section 7.1(d) hereof,
Parent shall immediately pay to the Company $409 million (the "Alternative
Parent Termination Fee") by wire transfer of immediately available funds to an
account designated by the Company.
(c) Payment of the fees described in Sections 7.5(a) and (b) above
constitute liquidated damages and shall be in lieu of all other damages incurred
in the event of breach of this Agreement.
Section 7.6 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors, acting by the affirmative vote of a
majority of the members of the entire Board of Directors.
ARTICLE VIII
General Provisions
Section 8.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except that any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger shall survive
the Merger.
Section 8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied, or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Gemstar International Group Limited
135 North Los Robles Avenue, Suite 800
Pasadena, California 91101
Facsimile: (626) 792-0257
Attention: Chief Executive Officer
A-39
<PAGE>
with a copy to:
O'Melveny & Myers LLP
Suite 1700
610 Newport Center Drive
Newport Beach, California 92660
Facsimile: (714) 669-6994
Attention: David A. Krinsky, Esq.
J. Jay Herron, Esq.
(b) if to the Company, to
TV Guide, Inc.
7140 S. Lewis Avenue
Tulsa, Oklahoma 74136-5422
Facsimile: (918) 488-4951
Attention: General Counsel
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue, Suite 2900
New York, New York 10022-6030
Facsimile: (212) 705-5125
Attention: Elizabeth Markowski, Esq.
Section 8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Average Market Capitalization" means one-half of the sum of the Market
Capitalization of the applicable corporation on the first day of the relevant
period and on the last day of the relevant period. "Market Capitalization" means
the product of the number of shares of the applicable corporation's common stock
outstanding on the relevant date multiplied by the average closing market price
of the Corporation's common stock for the 20 consecutive trading days
immediately preceding such date.
(c) "Company Ancillary Agreements" means the Stockholders' Agreement, the
Company Option Agreement and the IPG License Agreement;
(d) "material adverse change" or "material adverse effect" means, when used
in connection with the Company, the Surviving Corporation or Parent, any change,
event or effect that is materially adverse to the business, assets, financial
condition or results of operations of such party and its subsidiaries taken as a
whole, except to the extent that such change, event, or effect is attributable
to or results from (i) general change in the industries in which the Company,
the Surviving Corporation or Parent operate, (ii) changes in general economic
conditions or securities markets in general, or (iii) the effect of the public
announcement or pendency of the transactions contemplated hereby;
(e) "Parent Ancillary Agreements" means the Parent Option Agreement, the IPG
License Agreement, the Stockholders' Agreement, the Yuen Amendment and the
Parent Rights Agreement Amendment;
(f) "person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity; and
(g) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its directors or other
governing body (or, if there are no such voting interests, more than 50% of the
equity interest of which) is owned directly or indirectly by such first person.
A-40
<PAGE>
Section 8.4 Interpretation. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" and "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties whether by mail, overnight
courier, personal delivery or facsimile, it being understood that all parties
need not sign the same counterpart.
Section 8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
(and the other exhibits hereto), the Confidentiality Agreement and the other
documents referenced herein constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and except for the
provisions of Article II and Sections 5.4 and 5.6, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
Section 8.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with the internal laws of the State of Delaware without
regard to conflicts of laws, except for such provisions where the laws of the
British Virgin Islands is mandatorily applicable, which provisions shall be
governed by and construed in accordance with the laws of the British Virgin
Islands.
Section 8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the 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.
Section 8.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware State court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware State court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that
process may be served upon it in any manner authorized by the laws of the State
of Delaware, (c) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (d)
agrees that it will not bring any action relating to this Agreement in any court
other than a federal or State court sitting in the State of Delaware.
Section 8.10 Severability. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any such jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provisions, as to such jurisdictions, shall
be ineffective, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
A-41
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
Attest: "Parent"
Gemstar International Group Limited,
a British Virgin Islands corporation
By: /s/ Stephen A. Weiswasser By: /s/ Henry Yuen
_________________________________ _________________________________
Name: Stephen A. Weiswasser Name: Henry Yuen
Title: Secretary Title: Chief Executive Officer
Attest: "SUB"
G Acquisition Subsidiary Corp., a
Delaware corporation
By: /s/ Stephen A. Weiswasser By: /s/ Henry Yuen
_________________________________ _________________________________
Name: Stephen A. Weiswasser Name: Henry Yuen
Title: Assistant Secretary Title: Chief Executive Officer
Attest: "Company"
TV Guide, Inc., a Delaware corporation
By: /s/ Craig M. Waggy By: /s/ Peter C. Boylan III
_________________________________ _________________________________
Name: Craig M. Waggy Name: Peter C. Boylan III
Title: Senior Vice President and Title: President
Chief Financial Officer
A-42
<PAGE>
EXHIBIT 1.4
CERTIFICATE OF MERGER
---------------------
<PAGE>
CERTIFICATE OF MERGER
OF
TV GUIDE, INC.
WITH AND INTO
G ACQUISITION SUBSIDIARY CORP.
Pursuant to Section 251 of the
Delaware General Corporation Law
--------------------------------
The undersigned corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations to the merger are as follows:
Name State of Incorporation
---- ----------------------
TV Guide, Inc. ("TV Guide") Delaware
G Acquisition Subsidiary Corp. (the Delaware
"Company")
SECOND: That an Agreement and Plan of Merger, dated as of October 4, 1999,
among Gemstar International Group Limited, a British Virgin Islands corporation,
G Acquisition Subsidiary Corp., a Delaware corporation and a subsidiary of
Gemstar, and TV Guide, Inc., a Delaware corporation (the "Merger Agreement"),
has been approved, adopted, certified, executed and acknowledged by each of the
Company and TV Guide in accordance with the requirements of Section 251 of the
General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger is TVG,
Inc.
FOURTH: That the certificate of incorporation of the Company, attached
hereto as Exhibit A, shall be the certificate of incorporation of the surviving
---------
corporation.
FIFTH: That the executed Merger Agreement is on file at the principal
place of business of the surviving corporation. The address of the principal
place of business of the surviving corporation is 7140 S. Lewis Avenue, Tulsa,
Oklahoma 74136.
SIXTH: That a copy of the Merger Agreement will be furnished by the
surviving corporation, on request and without cost, to any stockholder of the
Company or Gemstar.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be signed by
Henry C. Yuen, the President and Chief Executive Officer of the Company, this
___ day of _______________, _____.
G ACQUISITION SUBSIDIARY CORP.
By: ___________________________________
Name: Henry C. Yuen
Title: President and Chief Executive
Officer
<PAGE>
EXHIBIT 99.2
BYLAWS
TV GUIDE INTERNATIONAL, INC.
(formerly known as Gemstar International Group Limited)
A Delaware Corporation
By-laws
----------------
ARTICLE I
Stockholders
Section 1.1 Annual Meeting.
An annual meeting of stockholders for the purpose of electing those
directors whose term of office expires at such meeting and of transacting such
other business as may properly come before it shall be held each year at such
date, time, and place in the United States, either within or without the State
of Delaware, as may be specified by the Board of Directors in the notice of
meeting.
Section 1.2 Special Meetings.
Except as otherwise provided in the terms of any class or series of
preferred stock or unless otherwise provided by law, special meetings of
stockholders of the Corporation, for any purpose or purposes, shall be called
by the Secretary of the Corporation promptly (i) upon the written request of
the holders of not less than a majority of the total voting power of the
outstanding Voting Securities (as hereinafter defined) of the Corporation (such
written request shall set forth the purpose or purposes for which the meeting
is called, and in case of a special meeting called for the purpose of
nominating directors of the Corporation, the information required by Section
1.9 hereof), or (ii) at the request of six of the twelve members of the Board
of Directors then authorized. The Secretary of the Corporation shall
immediately notify each member of the Board of Directors of the receipt of any
such request. The term "Voting Securities" shall mean the Corporation's Common
Stock, par value $.01 per share ("Common Stock"), and any class or series of
preferred stock entitled to vote with the holders of Common Stock generally
upon all matters which may be submitted to a vote of stockholders at any annual
meeting or special meeting thereof. Special meetings of stockholders for any
purpose or purposes may be held at such time and place in the United States
either within or without the State of Delaware as may be stated in the notice
of meeting.
Section 1.3 Notice of Meetings.
Written notice of stockholders meetings, stating the place, date, and hour
thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board, the
Chief Executive Officer (if different from the Chairman), any President and
COO, any Vice President, the Secretary, or an Assistant Secretary, to each
stockholder entitled to vote there at least ten days but not more than sixty
days before the date of the meeting, unless a different period is prescribed by
law or the Certificate of Incorporation of the Corporation, as amended from
time to time (the "Certificate").
Section 1.4 Notice of Nominations for the Election of Directors and the
Proposal of Business.
1.4.1 Annual Meetings of Stockholders.
Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to
C-1
<PAGE>
the Corporation's notice of meeting delivered pursuant to Section 1.3 of these
By-laws, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Corporation that has complied with all applicable
requirements of Section 1.9 hereof.
1.4.2 Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of stockholders as
shall have been brought before the meeting pursuant to the Corporation's notice
of meeting pursuant to Section 1.3 of these By-laws. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the Corporation's
notice of meeting (a) by or at the direction of the Board of Directors as
provided in Section 2.4 hereof or (b) by any stockholder of the Corporation that
has complied with all applicable requirements of Section 1.9 hereof.
1.4.3 General.
(a) Only persons who are nominated in accordance with the procedures set
forth in these By-laws shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in these
By-laws. Except as otherwise provided by law, the Certificate or these By-laws,
the chairman of the meeting shall have the power and duty to determine whether
a nomination or any business proposed to be brought before the meeting was made
in accordance with the procedures set forth in these By-laws and, if any
proposed nomination or business is not in compliance with these By-laws, to
declare that such defective proposal or nomination shall be disregarded.
(b) Notwithstanding the foregoing or the provisions of Section 1.9 of these
By-laws, a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder with respect to the matters set forth in this Section
1.4 or Section 1.9 of these By-laws. Nothing in these By-laws shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 1.5 Quorum.
Subject to the rights of the holders of any class or series of preferred
stock and except as otherwise provided by law or in the Certificate or
elsewhere in these By-laws, at any meeting of stockholders, the holders of a
majority in total voting power of the outstanding shares of stock entitled to
vote at the meeting shall be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, the holders of a majority in total voting power of the shares that are
present in person or by proxy or the chairman of the meeting may adjourn the
meeting from time to time in the manner provided in Section 1.6 of these By-
laws until a quorum shall attend.
Section 1.6 Adjournment.
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting. If the meeting is adjourned in a single adjournment for more
than thirty days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.7 Calling of Meeting.
The Chairman of the Board or, in the absence of the Chairman, the Chief
Executive Officer (if different from the Chairman) or, in the absence of the
Chief Executive Officer, the designee of the Chairman (provided
C-2
<PAGE>
such designee is a member of the Office of the Chief Executive or in their
absence, a Vice President), shall call to order meetings of stockholders and
shall act as chairman of such meetings. The Board of Directors or, if the Board
of Directors fails to act, the stockholders, may appoint any stockholder,
director, or officer of the Corporation to act as chairman of any meeting in
the absence of all of the foregoing officers.
The Secretary shall act as secretary of all meetings of stockholders, but,
in the absence of the Secretary, the chairman of the meeting may appoint any
other person to act as secretary of the meeting.
Section 1.8 Voting.
Subject to the rights of the holders of any class or series of preferred
stock and except as otherwise provided by law, the Certificate or elsewhere in
these By-laws and except for the election of directors, at any meeting duly
called and held at which a quorum is present, the affirmative vote of a
majority of the combined voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders. At any meeting duly called and held for
the election of directors at which a quorum is present, directors shall be
elected by a plurality of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
Section 1.9 Advance Notice; Nominations.
At an annual or special meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before a meeting, business must be: (a) specified in the
notice of meeting (or any supplement thereto) given pursuant to Section 1.3
hereof or (b) in the case of an annual meeting, (i) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (ii)
otherwise properly brought before the meeting by a stockholder of the
Corporation. For business (other than the nomination of directors) to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. The Secretary shall immediately notify each member of the Board of
Directors of the receipt of any such notice and the contents thereof. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (iii) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at
any meeting except in accordance with the procedures set forth in these By-
laws. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this By-law, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted, and if purported
to be transacted shall be void.
At each annual meeting of stockholders, the stockholders shall elect
directors in accordance with the Certificate. Only persons who are nominated in
accordance with the procedures set forth in this By-law shall be eligible for
election as directors at an annual meeting or at a special meeting called for
such purpose pursuant to Section 1.3 of these By-laws. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors
pursuant to Section 2.4 hereof or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this By-law. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing
C-3
<PAGE>
to the Secretary of the Corporation. The Secretary of the Corporation shall
immediately notify each member of the Board of Directors of the receipt of any
such notice and the contents thereof. To be timely, a stockholder's notice of
nomination in the case of an annual meeting or a special meeting called for the
election of directors shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made, and, provided, further, that in the case of a
special meeting called at the request of a stockholder or stockholders
nominating persons for election to the Board of Directors, the notice of
nomination by the stockholder(s) requesting such meeting will be timely if
received by the Corporation pursuant to Section 1.2 hereof. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including
without limitation such persons' written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in this By-law. The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by these By-laws, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. For purposes of this By-law, "public
disclosure" shall mean disclosure in a press release reported by Dow Jones News
Service, Associated Press or a comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.
ARTICLE II
Board of Directors
Section 2.1 Number and Term of Office.
(a) The governing body of this Corporation shall be a Board of Directors.
The Board of Directors shall be comprised of twelve (12) members, at least four
of whom shall be "Independent Directors". For purposes of these By-laws, the
term "Independent Director" means a person other than an officer or employee of
the Corporation or its subsidiaries or any other individual having a
relationship which, in the opinion of the GS Director Committee (as defined in
Section 2.11(e)) in the case of a GS Independent Director, and in the opinion
of the TVG Director Committee (as defined in Section 2.11(d)) in the case of a
TVG Independent Director, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director (provided that in
the event a designated Independent Director does not qualify under applicable
securities exchange or securities association listing standards as an
"independent director," then a new Independent Director shall be designated
pursuant to the terms hereof to replace such director). The Board of Directors,
by resolution adopted by the affirmative vote of at least nine of the twelve
members of the Board of Directors then authorized, may increase or decrease the
number of directors. Directors need not be stockholders of the Corporation.
Effective with the filing of the Certificate of Merger of TV Guide, Inc.
("TVG") and G Acquisition Subsidiary Corp., a subsidiary of the Corporation
(the "Effective Time"), the Board of Directors
C-4
<PAGE>
shall consist of six (6) directors who shall be persons designated by the Board
of Directors of TVG prior to the Effective Time to serve on the Board of
Directors of the Corporation (such directors, together with any person
subsequently elected or appointed to the directorship previously held by any
such director and any successor thereto in accordance with these By-laws, being
herein referred to as the "TVG Directors"), two of whom shall be Independent
Directors, and six (6) directors designated by the Board of Directors of the
Corporation prior to the Effective Time (such directors, together with any
person subsequently elected or appointed to the directorship previously held by
any such director and any successor thereto in accordance with these By-laws,
being herein referred to as the "GS Directors"), two of whom shall be
Independent Directors. Two of the TVG Directors who qualify as Independent
Directors shall be designated the TVG Independent Directors (which term shall
include any person subsequently elected or appointed to the directorship
previously held by any such TVG Independent Director and any successor thereto
who qualifies as an Independent Director). Two of the GS Directors who qualify
as Independent Directors shall be designated the GS Independent Directors
(which term shall include any person subsequently elected or appointed to the
directorship previously held by any such GS Independent Director and any
successor thereto who qualifies as an Independent Director). No class or series
of preferred stock shall be entitled to elect any additional directors,
although the terms of any class or series of preferred stock may provide that
the shares of such class or series are entitled to vote in elections of
directors.
(b) The Board of Directors shall be divided into three classes: Class I,
Class II and Class III. Each class of directors shall consist of a number of
directors equal as nearly as practicable to one-third of the then authorized
number of members of the Board of Directors. The initial term of office of the
Class I Directors shall expire at the annual meeting of stockholders in 2003;
the initial term of office of the Class II Directors shall expire at the annual
meeting of stockholders in 2002; and the initial term of office of the Class
III Directors shall expire at the annual meeting of stockholders in 2001. At
each annual meeting of stockholders of the Corporation, the successors of that
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of such election. The directors of each class
will hold office until their respective death, resignation or removal and until
their respective successors are elected and qualified. At the Effective Time,
two of the six TVG Directors will be Class I Directors, two will be Class II
Directors and two will be Class III Directors. At the Effective Time, the
remaining two Class I Directors, two Class II Directors and two Class III
Directors will be GS Directors. The class into which each director shall
initially be placed shall, in the case of the TVG Directors, be determined by
the Board of Directors of TVG prior to the Effective Time and shall, in the
case of the GS Directors, be determined by the Board of Directors of the
Corporation prior to the Effective Time.
Section 2.2 Resignations.
Any director of the Corporation, or any member of any committee, may resign
at any time by giving written notice to the Board of Directors and the Chairman
of the Board. Any such resignation shall take effect at the time specified
therein or, if the time be not specified therein, then upon receipt thereof.
The acceptance of such resignation shall not be necessary to make it effective
unless otherwise stated therein.
Section 2.3 Removal of Directors.
Directors may be removed from office with or without cause upon the
affirmative vote of holders of not less than 66 2/3% of the total voting power
of the then outstanding Voting Securities (as defined in Section 1.2), voting
together as a single class at a meeting specifically called for such purpose.
Section 2.4 Newly Created Directorships, Vacancies and Nominees.
Vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause shall be filled, and nominees for
directors in the case of expiration of a director's term shall be made, by the
majority vote of the directors present and voting at a meeting of the Board of
Directors duly called and held at which a quorum is present, or by unanimous
written consent of the directors; provided, however, that until the later of
the expiration of the Specified Period (as defined in Section 2.5 of these By-
laws) and the fifth anniversary of the Effective Time, if such vacancy resulted
from the death, resignation, removal,
C-5
<PAGE>
disqualification or other cause, or if the directorship expiring is that, of
(i) a TVG Director, then the power to fill such vacancy or make such nomination
shall be vested in the TVG Director Committee, or (ii) a GS Director, then the
power to fill such vacancy or make such nomination shall be vested in the GS
Director Committee. Newly created directorships resulting from any increase in
the number of directors on the Board of Directors, shall be filled solely by
the affirmative vote of not less than nine of the twelve members of the Board
of Directors then authorized. Any director appointed in accordance with either
of the two preceding sentences shall hold office for the remainder of the full
term of the class of directors in which the vacancy occurred or to which the
new directorship is apportioned, and until such director's successor shall have
been elected and qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
Section 2.5 Chairman of the Board.
The Chairman of the Board of Directors shall be elected from among the
members of the Board of Directors and shall perform the duties provided in
these By-laws and such other duties as may from time to time be assigned to the
Chairman by the Board of Directors. As of the Effective Time and during the
Specified Period (as defined below) the Chairman of the Board shall be
appointed by the GS Director Committee, but shall be Henry Yuen so long as he
is a GS Director. Upon the expiration of the Specified Period, the person who
immediately prior thereto was Chairman of the Board shall thereupon cease to be
Chairman of the Board, and from and after such time until (but not including)
the third annual Board of Directors' meeting following (i) the expiration of
the Specified Period or, if later, (ii) the fifth anniversary of the Effective
Time, the Chairman of the Board shall be elected by majority vote or unanimous
written consent of the TVG Directors. Following the expiration of the last of
the Specified Period and the period referred to in the immediately preceding
sentence (such periods, collectively, the "Specified Chairman Selection
Periods"), the directors shall select one of their members to be Chairman of
the Board of Directors. The term "Specified Period" as used in these By-laws
means the period beginning on the Effective Date and ending on the first to
occur of (i) the fifth anniversary of the Effective Time and (ii) such date as
Henry Yuen ceases to be Chief Executive Officer of the Corporation.
Section 2.6 Meetings.
The annual meeting of the Board of Directors, for the election of officers
and the transaction of such other business as may come before the meeting, shall
be held without notice at the same place as, and immediately following, the
annual meeting of the stockholders. Regular meetings of the Board of Directors
(including such annual meeting) shall be held not less frequently than
quarterly, at 10:00 a.m. local time on the last business day of each calendar
quarter, at the executive offices of the Corporation or at such other time and
place as shall be determined from time to time by the Board of Directors. Notice
of each regular meeting shall be furnished in writing to each member of the
Board of Directors not less than five business days in advance of said meeting,
unless such notice requirement is waived in writing by each member.
Special meetings of the Board of Directors shall be held at such time and
place within the United States as shall be designated in the notice of the
meeting. Special meetings of the Board of Directors may be called by the
Chairman of the Board and shall be called by the Secretary of the Corporation
upon the written request of not less than six of the twelve members of the
Board of Directors then authorized.
Section 2.7 Notice of Special Meetings.
The Secretary, or in his or her absence or failure to give such notice any
other officer of the Corporation, shall give each director notice of the time
and place of holding of special meetings of the Board of Directors by overnight
courier, or by telegram, cable, facsimile transmission, or personal service at
least three business days before the meeting unless such notice requirement is
waived in writing by each member. Unless otherwise stated in the notice
thereof, any and all business may be transacted at any meeting without
specification of such business in the notice.
C-6
<PAGE>
Section 2.8 Quorum and Organization of Meetings.
Except as provided in the immediately following sentence, a majority of the
total number of members of the Board of Directors as constituted from time to
time shall constitute a quorum for the transaction of business, but, if at any
meeting of the Board of Directors (whether or not adjourned from a previous
meeting) there shall be less than a quorum present, a majority of those present
may adjourn the meeting to another time and place, and the meeting may be held
as adjourned without further notice or waiver. Notwithstanding the foregoing,
the presence of six of the twelve members of the Board of Directors then
authorized will constitute a quorum for the transaction of business at a meeting
of the Board if (i) such meeting was duly called pursuant to these By-laws and
(ii) either all of the TVG Directors or all of the GS Directors fail to attend
such meeting. Except as otherwise required by law or provided by the Certificate
or these By-laws, directors present at any meeting at which a quorum is present
for the transaction of business may by majority vote decide any question brought
before such meeting (other than any Fundamental Decision (as defined below)).
Except as otherwise required by law or provided by the Certificate or these By-
laws, in the event of a tie vote of the Board of Directors on any matter that is
presented to the Board of Directors for its approval (but excluding any matter
delegated by these By-laws or the Board of Directors to the Compensation
Committee, the Audit Committee or the Special Committee (as defined below) for
determination), the Tie-breaking Committee during the Specified Period only, and
thereafter the TVG Director Committee during the remainder of the Specified
Chairman Selection Periods (as defined in Section 2.5 of these By-laws) only,
shall have the exclusive power to approve or disapprove the specific proposal
with respect to which the vote was tied. Notwithstanding anything to the
contrary contained in this Section 2.8, if the Specified Period expires prior to
the fifth anniversary of the Effective Time solely as the result of the
termination of Henry Yuen's employment as Chief Executive Officer of the
Corporation pursuant to the terms of his employment agreement with the
Corporation because of his death or disability, then during the period from such
expiration of the Specified Period to the fifth anniversary of the Effective
Time (the "Suspension Period"), no committee of directors will have the power to
approve or disapprove any proposal with respect to which the directors' votes
are tied. The power of the Tie-breaking Committee or the TVG Director Committee,
as applicable, to resolve a tie vote as described in this By-law shall not in
any event apply to any matter listed on Schedule I to these By-laws (each, a
"Fundamental Board Decision") or to any matter requiring the approval of
stockholders by a supermajority vote as provided in the Certificate (each, a
"Fundamental Stockholder Decision" and, together with the Fundamental Board
Decisions, the "Fundamental Decisions"). No action may be taken by the
Corporation or any of its subsidiaries with respect to any matter that
constitutes a Fundamental Decision without the prior approval of not less than
seven of the twelve members of the Board of Directors then authorized (or such
greater number of directors or percentage of the entire Board as may be
specified elsewhere in these By-laws or the Certificate) at a meeting of the
Board duly called and held or the unanimous written consent of the Board.
Meetings shall be presided over by the Chairman of the Board or in his or her
absence, the Chief Executive Officer (if different from the Chairman), or in his
or her absence, by his or her designee (provided such designee is a member of
the Office of the Chief Executive). The Board of Directors shall keep written
minutes of its meetings. The Secretary of the Corporation shall act as secretary
of the meeting, but in his or her absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.9 Indemnification.
The Corporation shall indemnify members of the Board of Directors and
officers of the Corporation and their respective heirs, personal representatives
and successors in interest for or on account of any action performed on behalf
of the Corporation, to the fullest extent provided by the laws of the State of
Delaware and the Certificate, as now or hereafter in effect.
Section 2.10 Executive Committee of the Board of Directors.
There shall be an executive committee of the Board of Directors, to be
comprised of four directors, except as otherwise provided below. As of the
Effective Time, the Executive Committee shall consist of each of the following
who are directors: the Chief Executive Officer (or, except during the
Suspension Period, if any, if the Chief Executive Officer is not a director,
the Chairman of the Board), the Chief Financial Officer and two of
C-7
<PAGE>
the TVG Directors designated by TVG prior to the Effective Time; provided,
however, that during the Specified Period (as defined in Section 2.5 of these
By-laws), if the Chief Financial Officer is not a GS Director, then the Chief
Financial Officer shall not be a member of the Executive Committee and a GS
Director designated by the GS Director Committee shall be a member of the
Executive Committee. During the Specified Period, the Tie-breaking Committee
will have the power to resolve any tie vote in the event of a tie vote by the
members of the Executive Committee on any matter properly presented to the
Executive Committee for determination. Thereafter during the remainder of the
Specified Chairman Selection Periods (as defined in Section 2.5 of these By-
laws), the TVG Director Committee will have the right to resolve such tie vote.
Notwithstanding anything to the contrary contained in this Section 2.10, during
the Suspension Period (as defined in Section 2.8 of these By-laws), if any, no
committee shall have the power to resolve a tie vote of the Executive
Committee. The TVG Director Committee shall have the exclusive power to replace
the TVG Directors on the Executive Committee and the two TVG Directors on the
Executive Committee shall abstain from any vote thereon. Subject to the
limitations of the laws of the State of Delaware and except as otherwise
provided in the Certificate or these By-laws, the Executive Committee shall
have such duties and powers relating to the management of the business and
affairs of the Corporation as may be delegated to it from time to time by the
affirmative vote of seven of the twelve members of the Board of Directors then
authorized; provided, however, that (i) during the Specified Chairman Selection
Periods the Executive Committee shall have all powers of the Board of Directors
with respect to matters related to the operations of the Corporation and its
subsidiaries between Board meetings, except as otherwise determined by the
Board of Directors or delegated to the Compensation Committee, the Special
Committee or the Audit Committee pursuant to these By-laws or otherwise, or
delegated by the Board to a different committee, and (ii) in the absence of a
Chief Executive Officer during the Suspension Period, if any, the Executive
Committee as then constituted shall have and perform the powers of the Chief
Executive Officer. No matter that constitutes a Fundamental Decision shall be,
in any event, within the power of the Executive Committee to determine.
Notwithstanding the foregoing, the Executive Committee will not have decision-
making authority with respect to any of the following matters and only the
Board of Directors shall have authority to decide such matters: (1) any
acquisition by the Corporation or any person controlled by the Corporation of
any business or assets if the amount involved exceeds $25 million, (2) any
sale, lease, exchange or other disposition, pledge or encumbrance of any assets
(including any interest or participation in any person) or of all or a part of
any business of the Corporation or any person controlled by the Corporation if
the amount involved exceeds $25 million, and (3) the incurrence by the
Corporation or any person controlled by the Corporation of indebtedness in
excess of $50 million in any fiscal year. The Executive Committee shall act by
the affirmative vote of a majority of the members of such committee that are
present at any duly called meeting of the Executive Committee at which a quorum
for the transaction of business is present (except as provided above with
respect to tie votes) or by unanimous written consent. The presence of at least
fifty percent of the members of the Executive Committee at any duly called
meeting held in the United States will constitute a quorum for the transaction
of business at such meeting. From the Effective Time and until the expiration
of the Specified Period, only the Chief Executive Officer may call a meeting of
the Executive Committee; thereafter, unless a majority of the members of the
Executive Committee otherwise determine, either the Chief Executive Officer
(or, if applicable, the Chairman of the Board) or any two members of the
Executive Committee may call a meeting of the Executive Committee. The Chief
Executive Officer (or, if applicable, the Chairman of the Board) will be the
chairman of the Executive Committee; provided, however, that in the absence of
a Chief Executive Officer during the Suspension Period, if any, the chairman of
the Executive Committee shall be selected by majority vote of the remaining
members of the Executive Committee. The Executive Committee shall keep minutes
of its meetings and shall report promptly after each of its meetings to the
Board of Directors so as to keep the Board of Directors sufficiently apprised
of the Executive Committee's meetings, actions and activities, and shall be
responsible to the Board of Directors for the conduct of the enterprises and
affairs entrusted to it.
Section 2.11 Other Committees of the Board of Directors.
(a) Compensation Committee. There shall be a compensation committee of the
Board of Directors. Subject to the limitations of the laws of the State of
Delaware and except as otherwise provided in the
C-8
<PAGE>
Certificate or these By-laws, the Compensation Committee will have the power to
make all decisions (other than any Fundamental Decision) with respect to the
compensation and the terms of employment of any executive officer of the
Corporation or any of its subsidiaries, or any other officer or employee of the
Corporation or any of its subsidiaries, and will have such other powers as may
be delegated by the Board to the Compensation Committee thereafter.
Notwithstanding the foregoing, unless and until otherwise determined by the
affirmative vote of not less than seven of the twelve members of the Board of
Directors then authorized, the Compensation Committee's authority to grant
stock options, stock appreciation rights, restricted stock awards or other
stock based compensation or otherwise to obligate the Corporation to issue any
equity security pursuant to a compensation plan or otherwise (collectively,
"Compensatory Awards"), shall be limited, on a cumulative basis from the
Effective Time, to an aggregate number of shares of Common Stock equal to the
product of the total number of shares of Common Stock outstanding on a fully
diluted basis immediately following the Effective Time (the "Fully Diluted
Share Number") times two percent (2%) (the "Available Stock Number"). Further,
not more than 1% of the Fully Diluted Share Number may be granted, awarded or
issued in the aggregate to officers of the Corporation or any person controlled
by the Corporation who directly report to the Chief Executive Officer, and any
such grant, award or issuance shall reduce the Available Stock Number. If a
Compensatory Award that reduced the Available Stock Number thereafter expires
unexercised or otherwise terminates without a payment in cash, stock, property
or otherwise, the shares of Common Stock subject to the unexercised or
terminated portion of such Compensatory Award shall be added back to the
Available Stock Number. All numbers of shares calculated in accordance with
this paragraph shall be appropriately adjusted on a consistent basis for stock-
splits, stock dividends, stock combinations and similar events following the
Effective Time. The adoption or amendment of any stock option, stock
appreciation rights or other stock incentive plan for the Corporation or any
person controlled by the Corporation shall be subject to the approval of the
Board of Directors.
The members of the Compensation Committee will be the two GS Independent
Directors; the two TVG Independent Directors and the Chief Executive Officer
(or, except during the Suspension Period, if any, if the Chief Executive
Officer is not a director, the Chairman of the Board). The Compensation
Committee shall act by the affirmative vote of a majority of all of the members
of the Compensation Committee or by unanimous written consent. The Chief
Executive Officer (or, if applicable, the Chairman of the Board) will be the
chairman of the Compensation Committee; provided, however, that in the absence
of a Chief Executive Officer during the Suspension Period, if any, the chairman
of the Compensation Committee shall be selected by majority vote of the
remaining members of the Compensation Committee. Any member of the Compensation
Committee who is an employee of the Corporation or its subsidiaries will not be
present during the deliberations with respect to, and shall abstain from and
not be present during any vote on, matters related to such employee's own
compensation or Compensatory Awards. The Compensation Committee shall keep
minutes of its meetings and shall report to the Board of Directors promptly
after each of its meetings so as to keep the Board of Directors sufficiently
apprised of the Compensation Committee's meetings, actions and activities.
(b) Special Committee. There shall be a separate committee of the Board of
Directors, which, subject to the limitations of the laws of the State of
Delaware and except as otherwise provided in the Certificate or these By-laws,
will have the exclusive power to determine matters (other than any Fundamental
Decision) related to the relationship with and among Service Providers (as
defined in the letter agreement, dated October 4, 1999, between Gemstar
International Group Limited and TV Guide, Inc. (the "Letter Agreement") (the
"Special Committee"). The approval of the Special Committee shall be required
for the adoption of a Standard Form of Service Provider Agreement (other than
one that contains only terms consistent with or more favorable to Service
Providers than the terms set forth on a schedule to the Letter Agreement (the
"Standard Terms")), for any proposed offer to or agreement with a Service
Provider that is less favorable to such Service Provider than such Standard Form
or the Standard Terms and for any proposed change in or adoption of a new
Standard Form of Service Provider Agreement or set of "Standard Terms" unless
the same is more favorable to Service Providers. The Special Committee will
include the Chief Executive Officer (or, except during the Suspension Period, if
any, if the Chief Executive Officer is not a director, the Chairman of the
Board), and, as of the Effective Time, two of the TVG Directors designated by
TVG prior to the Effective Time. The TVG Director Committee shall have the
C-9
<PAGE>
exclusive power to replace the TVG Directors on the Special Committee and the
two TVG Directors on the Special Committee shall abstain from any vote thereon.
The Special Committee shall act by the affirmative vote of a majority of all of
the members of the Special Committee or by unanimous written consent. The
Special Committee shall keep minutes of its meetings and shall report promptly
to the Board of Directors after its meetings so as to keep the Board of
Directors sufficiently apprised of the Special Committee's meetings, actions
and activities.
(c) Audit Committee. There shall be an audit committee of the Board of
Directors. The members of the Audit Committee will be the Chief Financial
Officer, one GS Independent Director and the two TVG Independent Directors.
Subject to the limitations of the laws of the State of Delaware and except as
otherwise provided in the Certificate or these By-laws, the Audit Committee
will have all powers normally accorded to the audit committee of a U.S. public
company, other than with respect to any Fundamental Decision. The Audit
Committee shall act by the affirmative vote of a majority of all members of the
Audit Committee or by unanimous written consent. The Audit Committee shall keep
minutes of its meetings, shall report to the Board of Directors promptly after
each of its meetings so as to keep the Board of Directors sufficiently apprised
of the Audit Committee's meetings, actions, and activities, and shall be
responsible to the Board of Directors for the conduct of the matters entrusted
to it.
(d) TVG Director Committee. There shall be a committee of the Board to be
comprised of all of the TVG Directors other than any TVG Independent Director
(the "TVG Director Committee"). The TVG Director Committee shall have the
powers and duties conferred upon it by these By-laws. The TVG Director
Committee shall act by the affirmative vote of a majority of all members of
such committee or by unanimous written consent. The TVG Director Committee
shall report promptly to the Board of Directors after each meeting so as to
keep the Board of Directors sufficiently apprised of such committee's meetings,
actions and activities. During the Specified Chairman Selection Periods, the
Board of Directors may dissolve the TVG Director Committee or alter or modify,
in any manner, its duties or composition (i.e., type of director) only with the
affirmative vote of not less than 10 of the 12 members of the Board of
Directors then authorized.
(e) GS Director Committee. There shall be a committee of the Board to be
comprised of all of the GS Directors other than any GS Independent Director
(the "GS Director Committee"). The GS Director Committee shall have the powers
and duties conferred upon it by these By-laws. The GS Director Committee shall
act by the affirmative vote of a majority of all of its members or by unanimous
written consent. The GS Director Committee shall report promptly to the Board
of Directors after each meeting so as to keep the Board of Directors
sufficiently apprised of such committee's meetings, actions, and activities.
During the Specified Period, the Board of Directors may dissolve the GS
Director Committee or alter or modify, in any manner, its duties or composition
(i.e., type of director) only with the affirmative vote of not less than 10 of
the 12 members of the Board of Directors then authorized; provided that if the
Specified Period should terminate as a result of the death or disability of
Henry Yuen, then, until the fifth anniversary of the Effective Time, the Board
of Directors may dissolve the GS Director Committee or alter or modify, in any
manner, its duties or composition (i.e., type of director) only with the
affirmative vote of not less than 9 of the 12 members of the Board of Directors
then authorized.
(f) Tie-breaking Committee. During the Specified Period, there shall be a
Tie-breaking Committee to be comprised of the Chairman of the Board. The Tie-
breaking Committee shall have the powers and duties conferred upon it by these
By-laws. The Tie-breaking Committee shall act by the affirmative vote of its
sole member or the written consent thereof. The Tie-breaking Committee shall
report promptly to the Board of Directors after each meeting so as to keep the
Board of Directors sufficiently apprised of such committee's meetings, actions
and activities. During the Specified Period, the Board of Directors shall not
dissolve the Tie-breaking Committee or alter or modify, in any manner, its
duties or composition.
(g) Other Committees. The Board of Directors may by resolution establish
other committees in addition to the Executive Committee, Compensation
Committee, Special Committee, Audit Committee, TVG Director Committee, GS
Director Committee and Tie-breaking Committee and shall specify with
particularity the
C-10
<PAGE>
powers and duties of any such committee. Subject to the limitations of the laws
of the State of Delaware and, except as provided in the Certificate or these
By-laws, any such committee shall exercise all powers and authority
specifically granted to it by unanimous vote of the entire Board of Directors.
Such committees shall serve at the pleasure of the Board of Directors; keep
minutes of their meetings; and have such names as the Board of Directors by
resolution may determine and shall be responsible to the Board of Directors for
the conduct of the enterprises and affairs entrusted to them. The Board of
Directors at any time may remove, with or without cause, any members of any
such other committee and may, with or without cause, disband any such other
committee.
Section 2.12 Committees Generally.
Subject to any requirements of these By-laws, each committee that may be
established by the Board of Directors pursuant to these By-laws may fix its own
rules and procedures. Notice of meetings of committees, other than of regular
meetings provided for by such rules, shall be given to committee members at
least one business day (and not less than 24 hours in advance of the scheduled
time of the meeting) prior to any such meeting to be held at any office of the
Corporation located in the continental United States. Longer notice periods
shall be provided for meetings at other locations.
Section 2.13 Directors' Compensation.
Directors shall receive such compensation for attendance at any meetings of
the Board and any expenses incidental to the performance of their duties, as
the Board of Directors shall determine by resolution. Such compensation may be
in addition to any compensation received by the members of the Board of
Directors in any other capacity.
Section 2.14 Action Without Meeting.
Nothing contained in these By-laws shall be deemed to restrict the power of
members of the Board of Directors or any committee designated by the Board to
take any action required or permitted to be taken by them without a meeting.
Section 2.15 Telephone Meetings.
Nothing contained in these By-laws shall be deemed to restrict the power of
members of the Board of Directors, or any committee designated by the Board of
Directors, to participate in a meeting of the Board of Directors, or committee,
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
ARTICLE III
Officers
Section 3.1 Executive Officers.
The officers of the Corporation shall be a Chairman of the Board, a Chief
Executive Officer, two or more Presidents and Chief Operating Officers, a Chief
Financial Officer, a General Counsel, who may be an Executive Vice President,
one or more Vice Presidents, and a Secretary, each of whom shall be elected by
the Board of Directors, and such other officers, including a Treasurer and a
Controller, as may from time to time be determined by the Board of Directors
and elected or appointed by the Board of Directors. A person may hold more than
one of the foregoing offices and during the Specified Period, the Chairman of
the Board and the Chief Executive Officer will be the same person. Subject to
Section 3.3, other than the Chief Executive Officer whose term is specified in
Section 3.2(b) hereof, each officer shall hold office until the first meeting
of the Board of Directors following the next annual meeting of stockholders
following their respective election.
C-11
<PAGE>
Section 3.2 Powers and Duties of Officers.
The officers of the Corporation shall have the authority and shall exercise
the powers and perform the duties specified below, and as may be additionally
specified by the Board of Directors or these By-laws (and in all cases where
the duties of any officer are not prescribed by the By-laws or the Board of
Directors, such officer shall follow the orders and instructions of the Chief
Executive Officer), except that in any event each officer shall exercise such
powers and perform such duties as may be required by law:
(a) Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the stockholders and the Board of Directors of the
Corporation and shall have and may exercise all such powers and perform such
other duties as are provided in these By-laws to be exercised or performed by
the Chairman and as may be assigned to the Chairman from time to time by the
Board of Directors. The Chairman of the Board shall be designated as set
forth in Section 2.5 hereof.
(b) Chief Executive Officer. The Chief Executive Officer shall, subject
to the direction and supervision of the Board of Directors, (i) have general
and active control of the Corporation's affairs and business and general
supervision of its officers, agents and employees; (ii) in the absence of the
Chairman of the Board (provided that the Chief Executive Officer does not
hold such position), preside at all meetings of the stockholders and the
Board of Directors; (iii) see that all orders and resolutions of the Board of
Directors are carried into effect; and (iv) perform all other duties incident
to the office of Chief Executive Officer and as from time to time may be
assigned to the Chief Executive Officer by the Board of Directors. Unless
otherwise authorized and directed by the Board of Directors or provided in
these By-laws, only the Chief Executive Officer or his or her designee
(provided such designee is a member of the Office of the Chief Executive)
shall execute on behalf of the Corporation all material contracts which
implement policies established by the Board of Directors. Henry C. Yuen shall
be the Chief Executive Officer of the Corporation until the fifth anniversary
of the Effective Time, unless he earlier dies or resigns or his employment is
terminated for disability as permitted by, or for "cause" within the meaning
of, his employment agreement as in effect immediately following the Effective
Time. If so determined by the affirmative vote of seven of the twelve members
of the Board of Directors then authorized (with Mr. Yuen abstaining from the
vote), Mr. Yuen's tenure as Chief Executive Officer may be extended from time
to time thereafter.
(c) President and Chief Operating Officer. Each President and Chief
Operating Officer shall, subject to the direction and supervision of the
Board of Directors and the Chief Executive Officer, perform all duties
incident to the office of President and Chief Operating Officer as from time
to time may be assigned to him or her by the Board of Directors or the Chief
Executive Officer. At the request of the Chief Executive Officer or, except
as otherwise provided in Section 2.10, in the event of his disability, legal
incapacity or refusal to act, at the request of the Board of Directors, a
President and Chief Operating Officer shall perform the duties of the Chief
Executive Officer in his capacity as an officer of the Corporation, and when
so acting shall have all the powers of, and be subject to all the
restrictions upon, the Chief Executive Officer in his capacity as an officer
of the Corporation. Each President and Chief Operating Officer shall report
to the Chief Executive Officer of the Corporation.
(d) Office of the Chief Executive. There shall be an Office of the Chief
Executive, comprised of the Chief Executive Officer of the Corporation and
the Presidents and Chief Operating Officers of the Corporation, each of whom
shall also be chairman and chief executive officer of certain of the
Corporation's business units.
(e) Executive Vice President; General Counsel. The Executive Vice
President and General Counsel shall be responsible for the legal affairs of
the Corporation and shall have such additional powers and perform such
additional duties as may be assigned to him or her by the Chief Executive
Officer or by the Board of Directors.
(f) Vice President. The Vice President, if any (or if there is more than
one, then each Vice President), shall assist the Chief Executive Officer and
the Presidents and Chief Operating Officers and
C-12
<PAGE>
shall perform such duties as may be assigned to the Vice President by the
Chief Executive Officer or by the Board of Directors. Assistant vice
presidents, if any, shall have the powers and perform the duties as may be
assigned to them by the Chief Executive Officer or by the Board of Directors.
(g) Chief Financial Officer; Treasurer. The Chief Financial Officer or,
in the absence of a Chief Financial Officer, the Treasurer shall: (i) be the
principal financial officer of the Corporation and have the care and custody
of all funds, securities, evidences of indebtedness and other personal
property of the Corporation and deposit the same in accordance with the
instructions of the Board of Directors; (ii) unless assigned to the
Controller, receive and give receipts and acquittance for moneys paid in on
account of the Corporation, and pay out of the funds on hand all bills,
payrolls and other debts of the Corporation of whatever nature upon maturity;
(iii) unless there is a Controller, be the principal accounting officer of
the Corporation and as such prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account,
prepare and file all local, state and federal tax returns, prescribe and
maintain an adequate system of internal audit and prepare and furnish to the
Chief Executive Officer, the Audit Committee and the Board of Directors
statements of account showing the financial position of the Corporation and
the results of its operations; (iv) upon request of the Board of Directors or
the Audit Committee, make such reports to it as may be required at any time;
and (v) perform all other duties incident to such office and such other
duties as from time to time may be assigned to the Chief Financial Officer by
the Board of Directors or the Chief Executive Officer. The Chief Financial
Officer and the Treasurer shall report to the Chief Executive Officer.
Assistant treasurers, if any, shall have the same powers and duties, subject
to the supervision of the Chief Financial Officer or Treasurer. If there is
no Chief Financial Officer or Treasurer, these duties shall be performed by
the Secretary or the Chief Executive Officer or other person appointed by the
Board of Directors.
(h) Secretary. The Secretary shall: (i) keep the minutes of the
proceedings of the stockholders, the Board of Directors and any committees of
the Board of Directors, which shall at all reasonable times be open to the
examination of any director; (ii) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (iii)
be custodian of the corporate records, which shall at all reasonable times be
open to the examination of any director, and of the seal of the Corporation;
(iv) keep at the Corporation's registered office or principal place of
business a record containing the names and addresses of all stockholders and
the number and class of shares held by each, unless such a record shall be
kept at the office of the Corporation's transfer agent or registrar; (v) have
general charge of the stock books of the Corporation, unless the Corporation
has a transfer agent; and (vi) in general, perform all other duties incident
to the office of Secretary, including certifying the record of proceedings of
the meetings of the stockholders or of the Board of Directors or resolutions
adopted at such meetings, signing or attesting certificates, statements or
reports required to be filed with governmental bodies or officials, signing
acknowledgments of instruments, and performing such other duties as from time
to time may be assigned to the Secretary by the Board of Directors, the Chief
Executive Officer or any President and Chief Operating Officer. The Secretary
shall report to the Chief Executive Officer. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the
Secretary.
(i) Surety Bonds. The Board of Directors may require any officer or
agent of the Corporation to execute to the Corporation a bond in such sums
and with such sureties as shall be satisfactory to the Board of Directors,
conditioned upon the faithful performance of his duties and for the
restoration to the Corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the Corporation.
(j) Budget. At the regular meeting of the Board of Directors, occurring
during the third calendar quarter in any calendar year, the Chief Executive
Officer shall present to the Board of Directors for its approval a draft
budget for the Corporation's ensuing fiscal year. The budget shall contain
information customarily included for corporations having a size and type of
business similar to that of the Corporation (the "Draft Budget"). If the
Draft Budget is approved by the Board of Directors, then the Draft Budget
shall be the budget for the Corporations' next succeeding fiscal year (the
"Budget"). If the Draft Budget is
C-13
<PAGE>
not so approved by the Board of Directors, then the Draft Budget shall be
amended by the Chief Executive Officer to reflect any changes requested by
the Board of Directors and shall be presented, together with all such
amendments, to the Board of Directors for its approval at the last regular
meeting of the Board of Directors in such calendar year. Upon the approval by
the Board of Directors of such amended Draft Budget, such budget shall be the
Budget.
Section 3.3 Resignations; Removals.
(a) Any officer of the Corporation may resign at any time, subject to any
rights or obligations under any then existing contracts between such officer
and the Corporation, by giving written notice to the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, any member of the Office of
the Chief Executive or the Secretary of the Corporation. Any such resignation
shall take effect at the time specified therein or, if the time be not
specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective unless otherwise stated
therein.
(b) Except as otherwise set forth herein, the Board of Directors, by a vote
of not less than seven of the twelve members of the Board of Directors then
authorized at any meeting thereof, or by unanimous written consent, at any
time, may, to the extent permitted by law, remove with or without cause from
office or terminate the employment of any officer, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
(c) Any vacancy in the office of any officer through death, resignation,
removal, disqualification, or other cause may be filled at any time by the
Board of Directors or, if such officer was appointed by the Chief Executive
Officer and is not a President and Chief Operating Officer, the Chief Financial
Officer or the Secretary, then by the Chief Executive Officer.
Section 3.4 Proxies.
Unless otherwise provided in the Certificate or directed by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer (if different
from the Chairman) and, with respect to the subsidiaries of the division or
corporation for which they are responsible, any other member of the Office of
the Chief Executive, or their respective designees, shall have full power and
authority on behalf of the Corporation to attend and to vote upon all matters
and resolutions at any meeting of stockholders of any corporation in which this
Corporation may hold stock, and may exercise on behalf of this Corporation any
and all of the rights and powers incident to the ownership of such stock at any
such meeting, whether regular or special, and at all adjournments thereof, and
shall have power and authority to execute and deliver proxies and consents on
behalf of this Corporation in connection with the exercise by this Corporation
of the rights and powers incident to the ownership of such stock, with full
power of substitution or revocation.
ARTICLE IV
Capital Stock
Section 4.1 Stock Certificates.
Each stockholder of the Corporation shall be entitled to a certificate
certifying the class and number of shares represented thereby and in such form,
not inconsistent with the law of the State of Delaware or the Certificate, as
the Board of Directors may from time to time prescribe.
The certificates of stock shall be signed by the Chairman of the Board, the
Chief Executive Officer (if different from the Chairman) or any other member of
the Office of the Chief Executive and by the Secretary or the Chief Financial
Officer, and sealed with the seal of the Corporation. Such seal may be a
facsimile, engraved or printed. Where any certificate is manually signed by a
transfer agent or by a registrar, the signatures of any officers upon such
certificate may be facsimiles, engraved or printed. In case any officer,
transfer agent or
C-14
<PAGE>
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such before the certificate is issued, it
may be issued by the Corporation with the same effect as if such officer,
transfer agent or registrar had not ceased to be such at the time of its issue.
Section 4.2 Transfer of Shares.
(a) Shares of the capital stock of the Corporation may be transferred on the
books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer
agent of the certificate representing such stock properly endorsed.
(b) The person in whose name shares of stock stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes, and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
Section 4.3 Lost Certificates.
The Board of Directors or any transfer agent of the Corporation may direct a
new certificate or certificates representing stock of the Corporation to be
issued in place of any certificate or certificates theretofore issued by the
Corporation, alleged to have been lost, stolen, or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate to be lost,
stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board
of Directors (or any transfer agent so authorized) shall direct to indemnify
the Corporation against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed or
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.
Section 4.4 Transfer Agent and Registrar.
The Board of Directors may appoint one or more transfer agents and one or
more registrars and may require all certificates for shares to bear the manual
or facsimile signature or signatures of any of them.
Section 4.5 Regulations.
The Board of Directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
ARTICLE V
General Provisions
Section 5.1 Offices.
The Corporation shall maintain a registered office in the State of Delaware
as required by law. The Corporation may also have offices in such other places,
either within or without the State of Delaware, as the Board of Directors may
from time to time designate or as the business of the Corporation may require.
Section 5.2 Corporate Seal.
The corporate seal shall have inscribed thereon the name of the Corporation,
the year of its organization, and the words "Corporate Seal" and "Delaware".
C-15
<PAGE>
Section 5.3 Fiscal Year.
The fiscal year of the Corporation shall end on March 31 of each calendar
year.
Section 5.4 Notices and Waivers Thereof.
Whenever any notice whatever is required by law, the Certificate or these
By-laws to be given to any stockholder, director or officer, such notice,
except as otherwise provided by law, may be given personally, or, in the case
of stockholders, by mail, or, in the case of directors or officers, by
telegram, cable or facsimile transmission, addressed to such address as appears
on the books of the Corporation. Any notice given by telegram, cable or
facsimile transmission shall be deemed to have been given when it shall have
been transmitted and any notice given by mail shall be deemed to have been
given three business days after it shall have been deposited in the United
States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate, or
these By-laws, a written waiver thereof, signed by the person entitled to such
notice, whether before or after the meeting or the time stated therein, shall
be deemed equivalent in all respects to such notice to the full extent
permitted by law.
Section 5.5 Amendments.
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors, by action taken by the
affirmative vote of not less than nine of the twelve members of the Board of
Directors then authorized, is hereby expressly authorized and empowered to
adopt, amend or repeal any provision of the By-laws of this Corporation.
Subject to the rights of the holders of any class or series of preferred
stock, these By-laws may be adopted, amended or repealed by the affirmative
vote of the holders of not less than 66 2/3% of the total voting power of the
Voting Securities of the Corporation entitled to vote thereon; provided,
however, that this paragraph shall not apply to, and no vote of the
stockholders of the Corporation shall be required to authorize, the adoption,
amendment or repeal of any provision of the By-laws by the Board of Directors
in accordance with the preceding paragraph.
For purposes of these Bylaws, the Letter of Agreement and any portion
thereof or schedule thereto may be amended, altered, modified or deleted only
with the affirmative vote of not less than nine of the twelve members of the
Board of Directors then authorized or by the affirmative vote of the holders of
not less than 66 2/3% of the total voting power of the Voting Securities of the
Corporation entitled to vote thereon.
C-16
<PAGE>
SCHEDULE I
FUNDAMENTAL BOARD DECISIONS
Fundamental Board Decisions means any of the following actions:
(a) the conduct by the Corporation or any person controlled by the
Corporation of any business other than the Business (as defined below);
(b) (i) any creation of (x) any additional class of capital stock of the
Corporation or any person controlled by the Corporation or (y) any security
having a direct or indirect equity participation in the Corporation or any
person controlled by the Corporation, or (ii) the sale or issuance (whether by
stock dividend, stock split, reclassification, in a public offering or
otherwise) by the Corporation or any person controlled by the Corporation of
shares of capital stock or warrants, options or rights to acquire shares of
capital stock or securities convertible into or exchangeable for capital stock
or any security having a direct or indirect equity participation in the
Corporation or any person controlled by the Corporation (other than (1) shares
of Common Stock or options to acquire shares of Common Stock issued to
employees, officers, directors and consultants of the Corporation pursuant to
commitments of the Corporation's predecessors in effect at the Effective Time,
or with the approval of the Compensation Committee but only with respect to the
Corporation's Common Stock and only within the limits set forth in Section
2.11(a) of the By-laws, (2) pursuant to the Rights Plan and (3) shares of
Common Stock issued in any acquisition permitted by and subject to the
limitations of paragraph (d) below), or (iii) any repurchases of stock in
excess of $50 million in any fiscal year by the Corporation or any person
controlled by the Corporation;
(c) any acquisition by the Corporation or any person controlled by the
Corporation of a business or assets (including, without limitation, an interest
or participation in any person) that is not within the scope of the Business;
(d) any acquisition by the Corporation or any person controlled by the
Corporation of any business or assets (including, without limitation, an
interest or participation in any person) that is within the scope of the
Business if the amount involved in such acquisition (and any related
transactions) plus the amount involved in all other acquisitions authorized in
the same fiscal year (whether by the Board or a duly authorized officer) which
were not Fundamental Board Decisions within the meaning of this subparagraph
(d) equals or exceeds 2% of the Average Market Capitalization (as defined
below) of the Corporation for the immediately preceding fiscal year;
(e) any disposition of all or any part of any material intellectual property
rights (all patent rights being deemed material) of the Corporation (except
through non-exclusive licenses) or any person controlled by the Corporation
(whether by sale or exchange, by exclusive license in any field of use,
contribution to joint venture or any other arrangement that is the practical
equivalent of a disposition of either any of the economic benefits of or the
right to control the exploitation of any such intellectual property rights) and
any pledge or encumbrance of any such intellectual property rights;
(f) the entering into by the Corporation or any person controlled by the
Corporation of any contracts (other than those pertaining or relating to
intellectual property rights) that are exclusive as against the Corporation or
any person controlled by the Corporation, except for such contracts entered
into in the ordinary course of the Corporation's business and which do not
involve an amount in excess of $50 million in any year;
(g) any sale, lease, exchange or other disposition, pledge or encumbrance of
any assets (including any interest or participation in any person) or of all or
a part of any business of the Corporation or any person controlled by the
Corporation if the amount involved in such transaction (and any related
transactions) or the fair market value of the assets so disposed of, pledged or
encumbered in such transaction (and any related transactions) plus the amount
involved in all other such dispositions, pledges or encumbrances which were not
Fundamental Board Decisions within the meaning of this subparagraph (g) and
were authorized in the same
C-17
<PAGE>
fiscal year equals or exceeds 1% of the Average Market Capitalization of the
Corporation for the immediately preceding fiscal year;
(h) the entering into by the Corporation or any person controlled by the
Corporation of any contract or commitments (other than for a transaction
described in another clause of this Schedule) if the aggregate amount of
annual expenses to be incurred by the Corporation and persons controlled by
the Corporation pursuant to such contracts or commitments entered into in any
fiscal year would exceed in any year of such contract or commitment the lower
of (x) 1% of the Average Market Capitalization of the Corporation for the
fiscal year immediately preceding the year in which such Contract or
Commitment is entered into or (y) $100 million;
(i) any amendment to or modification of any provision of the Restated
Certificate of Incorporation or By-laws of the Corporation as in effect from
time to time;
(j) any merger or consolidation of the Corporation with or into any other
person and any binding share exchange to which the Corporation is a party;
(k) any merger, consolidation or binding share exchange to which any person
controlled by the Corporation is a party which involves any action that
constitutes a Fundamental Board Decision under any other clause of this
Schedule (e.g. if it involves the acquisition of assets and the amount exceeds
the applicable amount determined in accordance with clause (d) above);
(l) the declaration or payment of any dividend or distribution by the
Corporation or any person controlled by the Corporation (other than the
payment of a dividend or making of a distribution to the Corporation by a
wholly owned subsidiary of the Corporation), other than under the Rights Plan;
(m) the dissolution, liquidation or winding up of (x) the Corporation or
(y) any person controlled by the Corporation if, in the case of this clause
(y), any action that constitutes a Fundamental Board Decision under any other
clause of this Schedule is involved;
(n) the entering into by the Corporation or any person controlled by the
Corporation of any agreement or the obtaining by the Corporation or any person
controlled by the Corporation of any license or franchise which purports to
restrict the persons or categories of persons to whom shares of the
Corporation's common stock may be transferred, or imposes or purports to
impose obligations on a stockholder as such or to bind or otherwise encumber
such shareholder's shares of Common Stock or any of its other assets other
than the Rights Plan;
(o) any amendment of or waiver under the Rights Plan that would extend the
term or the expiration date of the Rights Plan, add any new Exempt Person (as
defined in the Rights Plan) (or have the equivalent effect), or change the
definition of Acquiring Person (or any defined term used in such definition)
in a manner that would be adverse to any Exempt Person, or the adoption or
implementation of any new plan with an intended effect equivalent to those of
the Rights Plan;
(p) the incurrence by the Corporation or any person controlled by the
Corporation of indebtedness or the replacement or refinancing thereof unless
after giving effect to the incurrence such indebtedness the aggregate
outstanding principal amount of the indebtedness of the Corporation and all
persons controlled by the Corporation would not exceed the sum of (i) $550
million and (ii) 1% of the Average Market Capitalization of the Corporation
for the immediately preceding fiscal year;
(q) any change in the accountants for the Corporation (which accountants
shall initially be KPMG LLP);
(r) the institution, settlement or abandonment of any legal action or
arbitration in the name of the Corporation or any person controlled by the
Corporation involving a claim or claims for equitable relief or monetary
damages aggregating in excess of (i) $25 million if the Corporation is the
defendant in such action or
C-18
<PAGE>
(ii) 1% of the Average Market Capitalization of the Corporation for the
immediately preceding fiscal year if the Corporation is the plaintiff in such
action, or involving a claim or claims by any governmental authority;
(s) the incurrence of any capital expenditures for tangible assets in excess
of $50 million in any fiscal year;
(t) the making by the Corporation or any person controlled by the
Corporation of any loan or other advance of money to any person (excluding for
this purpose financing provisions contained in purchase agreements entered into
in the ordinary course of business) or the guaranteeing of the obligations of
any person, unless the amounts involved are less than $5 million in the
aggregate outstanding at any time and such person is not an Affiliated Party
(as defined below);
(u) the adoption or change of a significant tax or accounting practice or
principle of the Corporation or the making of any significant tax or accounting
election by the Corporation or the adoption of any position for purposes of any
tax return that will have a material adverse effect on any "United States
Shareholder" (defined as a United States person who owns or is deemed to own
10% or more of the voting power of a foreign corporation) or any affiliates
(within the meaning of Rule 12b-2 under the Exchange Act) of a United States
Shareholder;
(v) any transaction with an Affiliated Party (provided that the entering
into of an employment agreement with or the payment of compensation to an
employee of the Corporation or any person controlled by the Corporation, in his
or her capacity as such, which has been duly approved by the Compensation
Committee, shall not be deemed a transaction with an Affiliated Party);
(w) any changes in the composition of the Office of the Chief Executive
(i.e., the number and type of executive officers included), except as otherwise
contemplated by these By-laws, or the assignment to any officer that is not a
member of the Office of the Chief Executive of the powers, duties or
responsibilities of a member of the Office of the Chief Executive; provided
that this item shall not be deemed to prevent the delegation by an officer of
the Corporation of his or her duties to a subordinate officer or employee;
(x) any matter that by the express terms of the By-laws or the Certificate
require the approval of a specified percentage of the entire Board or number of
the members then authorized;
(y) any change in the composition of or the delegation of additional powers
or duties to any of the Executive Committee, Compensation Committee, Special
Committee, Audit Committee, TVG Director Committee, GS Director Committee or
Tie-breaking Committee or the establishment of any new committees of the Board;
and
(z) any determination pursuant to Section 2.13 of the By-laws to pay
compensation to directors, other than the Independent Directors, in their
capacity as such.
For purposes hereof, the term "Affiliated Party" means any director or
officer of the Corporation or any director or officer of any person controlled
by the Corporation, any holder of 5% or more of the Corporation's common stock
and the respective affiliates and associates (within the meaning of Rule 12b-2
under the Exchange Act) of the foregoing.
For purposes hereof, the term "Business" shall include (subject to the
following sentence) each of the following regardless of the method by which the
Corporation conducts the same, and notwithstanding the fact that neither TVG
nor the Corporation may or may not have been conducting the following
activities:
(a) designing, specifying, developing, publishing, distributing,
operating, marketing, licensing and/or selling (and preparing and offering to
do any of the foregoing) (i) program listing guides and program promotion
services, whether in print or electronic form and whether passive or
interactive, in any and all markets, (ii) interactive advertising,
information and data services and other products and services (including
news, weather, and sports information and e-commerce, but excluding full
motion video programming services) ancillary to, incorporated in, accessed
from within or provided, marketed or sold, in connection with any such guide,
and (iii) related data broadcasting services;
C-19
<PAGE>
(b) designing, specifying, developing, publishing, distributing,
operating, marketing, licensing and/or selling (and preparing and offering to
do any of the foregoing) (i) products and services enabling sorting,
selecting, recording, time shifting and/or personal storage of data,
including television programming and other video and multimedia data and any
other such services that will enhance the businesses described in
subparagraph (a) and (ii) interactive gaming services, including horse
racing, betting and lotteries;
(c) developing, investing in, licensing and otherwise exploiting
technologies and intellectual property rights related to or useful in the
businesses described in clauses (a) and (b);
(d) the marketing and sale of program listings data to third parties to
the extent not otherwise encompassed in clauses (a) or (b);
(e) the marketing and sale of available advertising inventory on all
platforms referred to in clauses (a) and (b) above;
(f) the marketing and distribution of superstation programming;
(g) the marketing and distribution of direct-to-home satellite-delivered
entertainment services to C-band satellite dish owners;
(h) the provision of information technology consulting services;
(i) the provision of point-to-multi-point audio and data satellite
transmission services;
(j) the provision of call center based subscriber management services to
multi-channel video programming providers; and
(k) any business other than businesses described in subparagraphs (a)
through (j) above that has been authorized by the Board of Directors.
Notwithstanding the foregoing, if at any time following the Effective Time
the Corporation ceases to conduct directly and indirectly any such business
referenced in clauses (f) through (j) above (whether as a result of the
disposition of all of the assets comprising any such business or of the
Corporation's interest in the subsidiary conducting the same or otherwise) then
such business shall thereupon cease to be included within the scope of the
Business.
For purposes hereof, the term "Average Market Capitalization" means one-half
of the sum of the Market Capitalization of the Corporation on the first day of
the relevant period and on the last day of the relevant period; provided, that
with respect to the Corporation's fiscal year in which the Effective Time
occurs, such term shall mean one-half of the sum of the Market Capitalization
of the Corporation on the business day immediately following the Effective Time
and on the last day of the Corporation's fiscal year. "Market Capitalization"
means the product of the number of shares of the Corporation's common stock
outstanding on the relevant date times the average of the market prices of the
Corporation's common stock for the 20 consecutive trading days immediately
preceding such date; provided that with respect to the relevant date which is
the business day immediately following the Effective Time, the term shall mean
the product of the number of shares of the Corporation's Common Stock
outstanding on such date times the market price of the Corporation's common
stock on such date.
For purposes hereof, the term "Rights Plan" means the Rights Agreement,
dated as of July 10, 1998, between Gemstar International Group Limited and
American Stock Transfer and Trust, as rights agent, as in effect immediately
following the Effective Time.
_______________
* If the Corporation replaces the Rights Plan with a new rights plan as
contemplated by the Merger Agreement, this definition will be amended
appropriately.
C-20
<PAGE>
EXHIBIT 99.4
October 3, 1999
TV Guide, Inc.
7140 S. Lewis Avenue
Tulsa, Oklahoma 74136-5422
Re Agreement of Principal Stockholders Concerning Transfer and
Voting of Shares of Gemstar International Group Limited
-----------------------------------------------------------
The undersigned understands that TV Guide, Inc., a Delaware
corporation ("TV Guide"), and Gemstar International Group Limited, a British
Virgin Islands corporation ("Gemstar"), of which the undersigned is a
stockholder, are prepared to enter into an agreement for the merger (the
"Merger") of G Acquisition Subsidiary Corp., a Delaware corporation ("Sub"),
into TV Guide, but that TV Guide has conditioned its willingness to proceed with
such agreement (the "Merger Agreement") upon its receipt from the undersigned of
assurances satisfactory to TV Guide of the undersigned's support of and
commitment to the Merger. In order to evidence such commitment and to induce TV
Guide to enter into the Merger Agreement, the undersigned hereby represents and
warrants to TV Guide and agrees with TV Guide as follows:
1. Voting. The undersigned will vote or cause to be voted all shares
------
of capital stock of Gemstar owned of record or beneficially owned or held in any
capacity by the undersigned or under the control of the undersigned in favor of
the Merger and the issuance of the Parent Common Stock in connection with the
Merger and other transactions provided for in or contemplated by the Merger
Agreement (including the domestication of Gemstar from the British Virgin
Islands to the State of Delaware), and against any inconsistent proposals or
transactions.
2. Ownership. As of the date hereof, Schedule 1 hereto sets forth
---------
the shares of Parent Common Stock owned by the undersigned of record or
beneficially, including shares issuable upon the exercise or conversion of
options or convertible securities of Gemstar (collectively, the "Shares").
3. No Ownership Interest. Except as set forth in Section 1, nothing
---------------------
contained in this Voting Agreement shall be deemed to vest in anyone other than
the undersigned any direct or indirect ownership or incidents of ownership of or
with respect to any Shares. All rights, ownership and economic benefits of and
relating to the Shares shall remain and belong to the undersigned, and no one
shall have any authority to manage, direct, restrict, regulate, govern, or
administer any of the policies or operations of Gemstar or exercise any power or
authority to direct the voting of any of the Shares as a result of this Voting
Agreement, except to the extent otherwise expressly provided herein.
4. Restriction on Transfer. During the period from the date of the
-----------------------
Merger Agreement and continuing until the earlier of (i) September 30, 2000;
(ii) the termination of the Merger Agreement pursuant to its terms; or (iii) the
Effective Time of the Merger, the undersigned will not sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein or agree to sell,
transfer, pledge or otherwise dispose of any of the Shares or any
<PAGE>
interest therein, without your express written consent, unless the transferee of
the Shares agrees in writing to be bound by the terms of this Voting Agreement;
provided, however, that (x) the undersigned may, without your consent, sell up
to 15% of the Shares owned, in the aggregate, by the undersigned, and (y) the
undersigned may pledge the Shares to secure bona fide indebtedness or bona fide
monetization transactions or to secure the obligations of a person in connection
with derivative transactions and settlement obligations thereunder (including,
without limitation, puts, calls, collars, swaps, etc.) with respect to the
Shares of Common Stock, provided that the terms of such derivative transaction
permit cash settlement of a party's obligations thereunder and do not restrict
our obligations to vote the pledged Shares in accordance with Section 1 hereof.
The provisions of Section 5 of this Agreement shall not apply to Shares disposed
of under clause (x) of the preceding sentence of this Section 4.
5. Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(a) The undersigned hereby irrevocably grants to, and appoints,
Peter Boylan and Joe Kiener, in their respective capacities as officers of TV
Guide, any individual who hereafter shall succeed to any such office of TV
Guide, and each of them individually, the undersigned's proxy and attorney-in-
fact (with full power of substitution), for and in the undersigned's name, place
and stead, to vote the Shares, or grant a consent or approval in respect of such
Shares, in accordance with our covenants in Section 1 hereof.
(b) The undersigned represents that any proxies heretofore given
in respect of the Shares are not irrevocable, and that all such proxies are
hereby revoked.
(c) The undersigned hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the undersigned's duties under this Agreement. The undersigned hereby further
affirms that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The undersigned hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
6. Termination. This letter agreement and the undersigned's
-----------
obligations hereunder will terminate concurrently with any termination of the
Merger Agreement.
7. Effective Date; Succession; Remedies. Upon your acceptance and
------------------------------------
execution of the Agreement, this letter agreement shall mutually bind and
benefit you and the undersigned, any of the undersigned's heirs, successors and
assigns and any of your successors. You will not assign the benefit of this
letter agreement other than to a wholly owned subsidiary. The undersigned
agrees that in light of the inadequacy of damages as a remedy, specific
performances shall be available to you, in addition to any other remedies you
may have for the violation of this letter agreement.
8. Nature of Holdings; Shares. All references herein to the
--------------------------
undersigned's holdings of the Shares shall be deemed to include Shares held or
controlled by any of us, individually, jointly (as community property or
otherwise), or in any other capacity, and shall extend to any securities issued
to any of us in respect of the Shares.
9. Defined Terms. All capitalized terms used herein shall have the
-------------
meaning ascribed to such terms in the Merger Agreement, unless otherwise defined
herein.
<PAGE>
10. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Very truly yours,
/s/ ELSIE MA LEUNG
--------------------------------
Elsie Ma Leung
ACCEPTED:
TV GUIDE, INC.
By: /s/ PETER C. BOYLAN III
-----------------------------
Name: Peter C. Boylan III
Title: President
<PAGE>
Schedule 1
----------
Beneficial Owner Ordinary Shares Owned
- ---------------- ---------------------
Elsie Ma Leung............................................ 3,869,999
<PAGE>
Exhibit 99.6
October 3, 1999
TV Guide, Inc.
7140 S. Lewis Avenue
Tulsa, Oklahoma 74136-5422
Re Agreement of Principal Stockholder Concerning Transfer and Voting
of Shares of Gemstar International Group Limited
------------------------------------------------------------------
The undersigned understands that TV Guide, Inc., a Delaware
corporation ("TV Guide"), and Gemstar International Group Limited, a British
Virgin Islands corporation ("Gemstar"), of which the undersigned is a
stockholder, are prepared to enter into an agreement for the merger (the
"Merger") of G Acquisition Subsidiary Corp., a Delaware corporation ("Sub"),
into TV Guide, but that TV Guide has conditioned its willingness to proceed with
such agreement (the "Merger Agreement") upon its receipt from the undersigned of
assurances satisfactory to TV Guide of the undersigned's support of and
commitment to the Merger. In order to evidence such commitment and to induce TV
Guide to enter into the Merger Agreement, the undersigned hereby represents and
warrants to TV Guide and agrees with TV Guide as follows:
1. Voting. The undersigned will vote or cause to be voted at any
------
meeting of the stockholders of Gemstar and in any action by consent by the
stockholders of Gemstar all shares of capital stock of Gemstar owned of record
or beneficially owned or held in any capacity by the undersigned or under the
control of the undersigned in favor of the Merger and the issuance of the Parent
Common Stock in connection with the Merger and other transactions provided for
in or contemplated by the Merger Agreement (including the domestication of
Gemstar from the British Virgin Islands to the State of Delaware), and against
any inconsistent proposals or transactions.
2. Ownership. As of the date hereof, Schedule 1 hereto sets forth
---------
the shares of Parent Common Stock owned by the undersigned of record or
beneficially, including shares issuable upon the exercise or conversion of
options or convertible securities of Gemstar (collectively, the "Shares").
3. No Ownership Interest. Except as set forth in Section 1, nothing
---------------------
contained in this Voting Agreement shall be deemed to vest in anyone other than
the undersigned any direct or indirect ownership or incidents of ownership of or
with respect to any Shares. All rights, ownership and economic benefits of and
relating to the Shares shall remain and belong to the undersigned, and no one
shall have any authority to manage, direct, restrict, regulate, govern, or
administer any of the policies or operations of Gemstar or exercise any power or
authority to direct the voting of any of the Shares as a result of this Voting
Agreement, except to the extent otherwise expressly provided herein.
4. Restriction on Transfer. During the period from the date of the
-----------------------
Merger Agreement and continuing until the earlier of (i) September 30, 2000;
(ii) the termination of the Merger Agreement pursuant to its terms; or (iii) the
Effective Time (as defined in the Merger Agreement), the undersigned will not
sell, transfer, pledge or otherwise dispose of any of the Shares or any interest
therein or agree to sell, transfer, pledge or otherwise dispose of any of the
Shares or any interest therein, without your express written consent, unless the
transferee of the Shares agrees in writing to be bound by the terms of this
Voting Agreement; provided, however, that (x) the undersigned may, without your
consent, sell up to 15% of the Shares owned, in the aggregate, by the
undersigned, and (y) the
-1-
<PAGE>
undersigned may pledge the Shares to secure bona fide indebtedness or bona fide
monetization transactions or to secure the obligations of a person in connection
with derivative transactions and settlement obligations thereunder (including,
without limitation, puts, calls, collars, swaps, etc.) with respect to the
Shares of Common Stock, provided that the terms of such derivative transaction
permit cash settlement of a party's obligations thereunder and do not restrict
our obligations to vote the pledged Shares in accordance with Section 1 hereof.
The provisions of Section 5 of this Agreement shall not apply to Shares disposed
of under clause (x) of the preceding sentence of this Section 4.
5. Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(a) The undersigned hereby irrevocably grants to, and appoints,
Peter Boylan and Joe Kiener, in their respective capacities as officers of the
TV Guide, any individual who hereafter shall succeed to any such office of TV
Guide, and each of them individually, the undersigned's proxy and attorney-in-
fact (with full power of substitution), for and in the undersigned's name, place
and stead, to vote the Shares, or grant a consent or approval in respect of such
Shares, in accordance with our covenants in Section 1 hereof.
(b) The undersigned represents that any proxies heretofore given
in respect of the Shares are not irrevocable, and that all such proxies are
hereby revoked.
(c) The undersigned hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the undersigned's duties under this Agreement. The undersigned hereby further
affirms that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The undersigned hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
6. Termination. This letter agreement and the undersigned's
-----------
obligations hereunder will terminate upon the earlier to occur of (i) the
Effective Time as defined in the Merger Agreement; (ii) the date on which the
Merger Agreement is terminated; or (iii) September 30, 2000.
7. Effective Date; Succession; Remedies. Upon your acceptance and
------------------------------------
execution of the Agreement, this letter agreement shall mutually bind and
benefit you and the undersigned, any of the undersigned's heirs, successors and
assigns and any of your successors. You will not assign the benefit of this
letter agreement other than to a wholly owned subsidiary. The undersigned agrees
that in light of the inadequacy of damages as a remedy, specific performances
shall be available to you, in addition to any other remedies you may have for
the violation of this letter agreement.
8. Nature of Holdings; Shares. All references herein to our holdings
--------------------------
of the Shares shall be deemed to include Shares held or controlled by any of us,
individually, jointly (as community property or otherwise), or in any other
capacity, and shall extend to any securities issued to any of us in respect of
the Shares.
9. Defined Terms. All capitalized terms used herein shall have the
-------------
meaning ascribed to such terms in the Merger Agreement, unless otherwise defined
herein.
-2-
<PAGE>
10. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Very truly yours,
Principal Stockholder
THOMSON multimedia S.A.
By: /s/ JAMES E. MEYER
---------------------------
Name: James E. Meyer
---------------------------
Its: Senior Executive Vice President
-------------------------------
ACCEPTED:
TV GUIDE, INC.
By: /s/ PETER C. BOYLAN III
--------------------------------
Name: Peter C. Boylan III
-------------------------------
Title: President
-------------------------------
-3-
<PAGE>
Schedule 1
----------
Beneficial Owner Ordinary Shares Owned
- ---------------- ---------------------
THOMSON multimedia S.A. .................................. 6,453,732
-Schedule 1-
<PAGE>
EXHIBIT 99.9
STOCKHOLDERS' AGREEMENT
among
The News Corporation Limited
Liberty Media Corporation
Henry C. Yuen
and
Gemstar International Group Limited
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<C> <S> <C>
RECITALS ............................................................... 1
SECTION 1. DEFINITIONS; CERTAIN GENERAL MATTERS........................... 1
1.1 Certain Defined Terms.......................................... 1
1.2 Voting; Written Consent........................................ 8
1.3 Effectiveness.................................................. 8
SECTION 2. BOARD OF DIRECTORS............................................. 9
2.1 Composition.................................................... 9
2.2 Removal........................................................ 11
2.3 Vacancies...................................................... 11
2.4 Board of Directors and Stockholders Vote....................... 11
2.5 Officers....................................................... 12
2.6 Fiduciary Duties............................................... 12
2.7 Termination of Voting Obligations.............................. 12
SECTION 3. OTHER ARRANGEMENTS............................................. 13
3.1 Certain Restrictions........................................... 13
3.2 By-laws........................................................ 14
SECTION 4. TRANSFERS...................................................... 14
4.1 General........................................................ 14
4.2 Offer Procedures............................................... 15
4.3 Terms and Conditions of Sales.................................. 16
SECTION 5. REGISTRATION................................................... 18
5.1 Demand Registrations........................................... 18
5.2 Lockup Agreements.............................................. 21
5.3 Registration Procedures........................................ 21
5.4 Expenses....................................................... 23
5.5 Obligations of Requesting Holders Participating
in Demand Registration......................................... 24
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
Page
<C> <S> <C>
5.6 Indemnification and Contribution............................... 24
SECTION 6. LEGEND......................................................... 26
SECTION 7. REPRESENTATIONS AND WARRANTIES................................. 27
SECTION 8. NON-COMPETE.................................................... 28
SECTION 9. MISCELLANEOUS.................................................. 28
9.1 Waivers........................................................ 28
9.2 Specific Performance........................................... 28
9.3 Remedies Cumulative............................................ 28
9.4 Attorneys' Fees................................................ 29
9.5 Execution...................................................... 29
9.6 Notices........................................................ 29
9.7 Entire Agreement............................................... 31
9.8 Binding Effect................................................. 31
9.9 Governing Law.................................................. 31
9.10 Waiver of Jury Trial........................................... 31
9.11 Interpretation................................................. 31
9.12 Term........................................................... 32
9.13 Controlled Related Parties..................................... 32
9.14 Assignment..................................................... 32
</TABLE>
<PAGE>
EXHIBIT 99.9
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, dated as of October 4, 1999 and to be
effective at the Effective Time (defined below), is by and among The News
Corporation Limited, a South Australia, Australia corporation, Liberty Media
Corporation, a Delaware corporation, Henry C. Yuen, a United States citizen
("Yuen"), and Gemstar International Group Limited, a corporation organized under
the laws of the British Virgin Islands (the "Corporation"). The parties listed
above, excluding the Corporation, shall be referred to herein as the
"Stockholders".
RECITALS
A. The Corporation has entered into an Agreement and Plan of Merger, dated
as of October 4, 1999 (the "Merger Agreement"), with TV Guide, Inc., a Delaware
corporation ("TVG"), and G Acquisition Subsidiary Corp., a Delaware corporation
and a wholly-owned subsidiary of the Corporation ("Sub").
B. Pursuant to the Merger Agreement, Sub will merge with and into TVG with
TVG being the surviving entity, such merger becoming effective upon the filing
of a Certificate of Merger with respect thereto with the Secretary of State of
the State of Delaware (the "Effective Time").
C. The parties intend that this Agreement shall not be effective until the
Effective Time.
D. At the Effective Time, the Corporation will redomesticate to Delaware
and change its name to "TV Guide International, Inc." and TVG will change its
name to "TVG, Inc."
E. At the Effective Time, the Stockholders will beneficially own shares of
the Common Stock, par value $.01 per share, of the Corporation ("Common Stock")
and rights to purchase such shares.
F. The Stockholders desire to express their agreement regarding, among
other matters, the voting of their shares of Common Stock and management of the
Corporation, upon the terms and conditions hereinafter provided.
Therefore, in consideration of the mutual promises contained herein and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound, the parties agree as
follows:
SECTION 1. DEFINITIONS; CERTAIN GENERAL MATTERS
1.1 Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the meanings set forth below.
Agreement: this Stockholders' Agreement, as amended from time
to time in accordance with its terms, including all
exhibits to this Agreement.
<PAGE>
Board: the Board of Directors of the Corporation at and
following the Effective Time.
Business Day: any day other than a Saturday, Sunday or a day on
which national banks in the United States are
required or authorized to be closed.
By-laws: the By-laws of the Corporation in effect at the
Effective Time, as (unless the context indicates
otherwise) the same may be amended from time to
time.
Cause: the definition of "Cause" within the meaning of the
Amended and Restated Employment Agreement, dated as
of January 7, 1998, by and among the Corporation,
Gemstar Development Corporation ("GDC") and Yuen,
as amended by Amendment No. 1 thereto, dated as of
October ___, 1999 (collectively, the "Yuen
Employment Agreement").
Certificate: the Certificate of Incorporation of the Corporation
in effect at the Effective Time, as (unless the
context indicates otherwise) the same may be
amended from time to time.
Closing Price: of a share of Common Stock on any Trading Day, (i)
the last reported sale price, regular way, for a
share of Common Stock on such Trading Day as
reported on the principal national securities
exchange on which the Common Stock is listed or
admitted for trading, or (ii) if the Common Stock
is not listed or admitted for trading on any
national securities exchange, the last reported
sale price, regular way, for a share of Common
Stock on such Trading Day as reported on The Nasdaq
Stock Market, or (iii) if the Common Stock is not
listed or admitted to trading on any national
securities exchange or The Nasdaq Stock Market, the
average of the highest bid and lowest asked prices
for a share of Common Stock on such Trading Day in
the domestic over-the-counter market as reported by
the National Quotation Bureau Incorporated, or any
similar successor organization.
Commission: the Securities and Exchange Commission (and any
successor to the functions of such agency).
2
<PAGE>
Control: the ability to direct or cause the direction
(whether through the ownership of voting
securities, by contract or otherwise) of the
management and policies of a Person or to control
or direct (whether affirmatively or negatively and
whether through the ownership of voting securities,
by contract or otherwise) the decision of such
Person to engage in the particular conduct at
issue.
Controlled with respect to any Person, any other Person that
Affiliate: the first Person directly or indirectly through one
or more intermediaries Controls. For purposes of
this Agreement, neither the Corporation nor any
Person Controlled by the Corporation shall be
deemed to be a Controlled Affiliate of any
Stockholder.
Controlled Related when used with respect to any specified Person,
Party: each affiliate or associate of such Person (within
the meaning of Rule 12b-2 under the Exchange Act)
if the specified Person possesses, directly or
indirectly, by or through stock ownership, agency
or otherwise, or pursuant to or in connection with
an agreement, arrangement or understanding (written
or oral) with one or more other Persons, the power
to direct decisions regarding the acquisition,
disposition or voting by such affiliate or
associate of Common Stock or rights to acquire or
vote Common Stock.
Exchange Act: the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission
promulgated thereunder
Governmental any consent, approval or authorization of, notice
Approval: to, declaration of, or filing with, any
Governmental Authority, including expiration or
early termination of all applicable waiting periods
under the HSR Act.
Governmental means any court, administrative agency or
Authority: commission or other governmental agency or
instrumentality, domestic or foreign, or any
arbitrator, of competent jurisdiction.
GS Director: each of the six members of the Board effective
immediately following the Effective Time, who were
designated by the directors of the Corporation
prior to the Effective Time, and each natural
person hereafter elected or appointed to the
directorship
3
<PAGE>
previously held by any such person or by any
successor thereto in accordance with Section 2.4 of
the Bylaws as in effect at the Effective Time.
GS Independent the two GS Directors that qualify as Independent
Directors: Directors and were designated by the Board of
Directors of this Corporation prior to the
Effective Time as the GS Independent Directors, and
each natural person hereafter elected or appointed
to the directorship previously held by each such GS
Independent Directors or any successors thereto in
accordance with Section 2.4 of the By-laws as in
effect at the Effective Time.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations
promulgated thereunder.
Immediate Family: means as to any natural person such person's
spouse; parents; children; grandchildren; siblings;
mothers-and fathers-in-law; sons- and daughters-in-
law; and brothers- and sisters-in-law.
Independent shall have the meaning ascribed thereto in the
Director: Corporation's Bylaws.
Liberty: Liberty Media Corporation, a Delaware corporation,
and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all
of Liberty's business and assets, as long as such
successor continues to be bound by the terms of
this Agreement.
Liberty Group: Liberty and its Controlled Related Parties.
Liberty Liberty for so long as any member of the Liberty
Stockholder: Group beneficially owns any Common Stock.
Lien: means, with respect to any securities, any lien,
pledge, charge, security interest, or encumbrance
of any nature whatsoever in or on such securities,
including, without limitation, any purchase option,
call or similar right of a third party with respect
to such securities or any limitation on the voting
rights of such securities.
4
<PAGE>
Minimum Ownership will be satisfied with respect to either the
Condition: Liberty Group or the News Group as of any date of
determination if as of such date the Liberty Group
or the News Group (as the case may be) (i)
beneficially owns in the aggregate a percentage of
the outstanding shares of Common Stock greater than
one-half the percentage then owned by Yuen (with
all shares of Common Stock then owned by any member
of Yuen's Immediate Family which were acquired from
Yuen pursuant to a Permitted Transfer being deemed
to be owned for this purpose by Yuen) and (ii) has
not in the aggregate Transferred (except, (A) in
the case of the Liberty Group, within the Liberty
Group or to any member of the News Group or in the
case of News Group, within the News Group or to any
member of the Liberty Group, or (B) in a manner
equivalent to the other stockholders of the
Corporation in a transaction approved by the Board
that is either (i) a merger, consolidation, binding
share exchange or similar transaction or (ii) a
transaction (including, without limitation, an
exchange offer) in which such stockholders receive
securities of the Corporation or a successor
thereto or an entity which owns the Corporation) a
number of shares of Common Stock representing more
than 50% of the number of shares of Common Stock
beneficially owned by such group in the aggregate
immediately following the Effective Time (as such
number shall be adjusted for stock-splits, stock
dividends, reverse stock-splits, recapitalizations,
reclassifications and other similar actions taken
with respect to the Common Stock).
NDS Business: the provision by News Digital Systems plc and its
subsidiaries of technology relating to electronic
program guides solely in conjunction with the
development and sale of encryption and conditional
access services for television and data
broadcasting.
News Corp.: The News Corporation Limited, a South Australia,
Australia corporation, and any successor (by
merger, consolidation, Transfer or otherwise) to
all or substantially all, of its business and
assets, as long as such successor continues to be
bound by the terms of this Agreement.
5
<PAGE>
News Group: News Corp. and its Controlled Related Parties.
News Stockholder: News Corp. for so long as any member of the News
Group beneficially owns any Common Stock.
Permitted Pledge: a bona fide pledge of Common Stock by Yuen to a
financial institution to secure personal
borrowings; provided that such financial
--------
institution agrees in writing with the Liberty
Stockholder and the News Stockholder (or the
Liberty Stockholder and the News Stockholder are
entitled to enforce such agreement against such
financial institution as express third party
beneficiaries) to be bound by the provisions of
Section 4 of this Agreement to the same extent and
with the same effect as Yuen.
Permitted Transfer: (i) a Transfer by Yuen of shares of Common Stock to
a custodian under the Uniform Gifts to Minors Act
or similar fiduciary for the exclusive benefit of
Yuen's children during their lives or to a trust
described in Section 664 of the Internal Revenue
Code of 1986, as amended (the "Code"), of which
Yuen or members of his family (and no other
persons) are income beneficiaries; (ii) a Transfer
of up to 15% of the aggregate number of shares of
Common Stock beneficially owned by Yuen immediately
following the Effective Time (on a fully diluted
basis assuming the exercise of all vested and
unvested options owned by Yuen) to any charitable
organization described in Section 501(c)(3) of the
Code; (iii) a Transfer to any member of Yuen's
Immediate Family, provided that Yuen provides
notice to the other parties of any such Transfer
and provided that such transferee agrees with the
other parties hereto to be bound by the provisions
of Section 4 of this Agreement to the same extent
and with the same effect as Yuen; or (iv) a
Transfer by testamentary or intestate disposition.
Person: any individual, corporation, partnership, limited
liability company, joint venture, business
association or other entity.
Rights Plan: The Rights Agreement, dated as of July 10, 1998,
between Gemstar International Group Limited and
American Stock Transfer and Trust, as rights agent,
6
<PAGE>
as amended, including the Rights Certificates that
may be issued pursuant thereto.
Securities Act: the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated
thereunder.
Specified Period: the period beginning at the Effective Time and
ending on the first to occur of (i) the fifth
anniversary of the Effective Time and (ii) such
date as Yuen ceases to be Chief Executive Officer
of the Corporation other than as a result of
termination of such employment by the Corporation
"Without Cause" (as such term is defined in the
Yuen Employment Agreement).
Subsidiary: of any Person (the "first Person") means any other
Person (the "second Person") a majority of the
voting power of the outstanding voting interests of
which are owned by the first Person and/or one or
more Subsidiaries of the first Person; provided,
however, that (i) a Person shall not be deemed to
be a Subsidiary of Liberty or News Corp., as the
case may be, unless Liberty or News Corp.,
respectively, Controls such Person, and (ii) such
second Person shall be deemed to be a Subsidiary of
the first Person only for so long as such ownership
and, if applicable, Control exists.
Trading Day: a day on which the principal national securities
exchange on which the Common Stock is listed or
admitted to trading, or The Nasdaq Stock Market if
the Common Stock is not listed or admitted to
trading on any national securities exchange, as
applicable, is open for the transaction of business
(unless such trading shall have been suspended for
the entire day) or, if the Common Stock is not
listed or admitted to trading on any national
securities exchange or The Nasdaq Stock Market, any
Business Day.
Transfer: to sell, exchange, assign, gift, devise or
otherwise transfer; provided that, for purposes of
Section 2.1 and the definition of Minimum Ownership
Condition, a Transfer shall not include a pledge of
shares of Common Stock to secure bona fide
indebtedness or bona fide monetization transactions
7
<PAGE>
or to secure the obligations of a Person in
connection with derivative transactions and
settlement obligations thereunder (including,
without limitation, puts, calls, collars, swaps,
etc.) with respect to shares of Common Stock,
provided that the terms of such derivative
transaction permit cash settlement of a party's
obligations thereunder.
TVG Director: each of the six members of the Board effective
immediately following the Effective Time who were
designated by the Board of Directors of TVG prior
to the Effective Time to serve on the Board, and
each natural person hereafter elected or appointed
to the directorship previously held by any such
person or by any successor thereto in accordance
with Section 2.4 of the Bylaws as in effect at the
Effective Time.
TVG Independent the two TVG Directors that qualify as Independent
Directors: Directors and were designated by the Board of
Directors of TVG prior to the Effective Time as the
TVG Independent Directors, and each natural person
hereafter elected or appointed to the directorship
previously held by each such TVG Independent
Directors or any successors thereto in accordance
with Section 2.4 of the By-laws, as in effect at
the Effective Time.
1.2 Voting; Written Consent.
-----------------------
Any agreement by a Stockholder herein to vote or cause to be voted the
shares of Common Stock beneficially owned by such Stockholder in a certain
manner shall be deemed, in each instance, to include an agreement by such
Stockholder to take all actions within its control necessary to call, or cause
the Corporation and the appropriate officers and directors of the Corporation to
call, as promptly as practicable, a special or annual meeting of stockholders or
to act by written consent, and to be present in person or by proxy and vote at
such meeting. When any action is required to be taken by a Stockholder pursuant
to this Agreement, such Stockholder shall take all steps within its control
necessary to implement such action.
1.3 Effectiveness.
-------------
This Agreement shall become effective only upon the Effective Time
and, in the event of Yuen's death prior to the Effective Time, shall become
effective at the Effective Time and be binding upon each other Stockholder and
the Corporation. This Agreement shall terminate automatically and without any
further action of the parties hereto in the event that the Merger Agreement is
terminated pursuant to its terms. At the Effective Time, the parties shall
8
<PAGE>
set forth the number of outstanding shares of Common Stock and rights to
purchase shares of Common Stock of such parties at such time on Exhibit A
hereto.
SECTION 2. BOARD OF DIRECTORS
2.1 Composition.
-----------
(a) At the Effective Time, the Board consists of 12 directors, of
which six are TVG Directors and six are GS Directors. After the Effective Time,
unless otherwise agreed by Yuen, the Liberty Stockholder and the News
Stockholder, the Board shall continue to consist of 12 persons and, subject to
this Section 2.1, (i) the Liberty Stockholder will be entitled to designate
three directors, one of which is to be an Independent Director (the "Liberty
Designees"), (ii) the News Stockholder will be entitled to designate three
directors, one of which is to be an Independent Director (the "News Designees"),
and (iii) Yuen will be entitled to designate six directors including himself,
two of which are to be Independent Directors (the "HY Designees"). Two of the
initial TVG Directors and one TVG Independent Director will be deemed to be the
initial Liberty Designees and two of the initial TVG Directors and one TVG
Independent Director, will be deemed to be the initial News Designees. Each of
the Liberty Stockholder and the News Stockholder (as the case may be) will have
the right, subject to the provisions of Section 2.4 of the By-laws, (x) to
renominate any director designated or deemed designated by it for election at
the expiration of his or her term as director and to designate a successor to
any such TVG Director, whether to fill a vacancy during the term of such
directorship (including as a result of the death, resignation or removal of any
such director) or as a replacement nominee at the expiration of the term of such
directorship. The initial GS Directors including the GS Independent Directors,
will be deemed to be the initial HY Designees, and Yuen will have the right,
subject to the provisions of Section 2.4 of the By-laws, (x) to renominate any
such director for election at the expiration of his or her term as director and
(y) to designate a successor to any such GS Director, whether to fill a vacancy
during the term of such directorship (including as a result of the death,
resignation or removal of any such director) or as a replacement nominee at the
expiration of the term of such directorship.
(b) [Intentionally Omitted]
(c) Each Stockholder agrees to vote and to cause its Controlled
Related Parties to vote all shares of Common Stock beneficially owned by it or
him for the election to the Board of the Persons designated to be directors in
accordance with this Agreement. Yuen, the Liberty Stockholder and the News
Stockholder agree to use their best efforts to cause the respective HY
Designees, Liberty Designees and News Designees to vote in favor of the
nomination by the Board for election by stockholders or, if applicable, for the
appointment by the Board, of the persons designated to be directors in
accordance with this Agreement. To the extent that the Liberty Group or the News
Group ceases to beneficially own any shares of Common Stock, but continues to
have one or more designees to the Board serving on the Board, then each of
Liberty and News, as the case may be, shall use its best efforts to cause its
designees to vote in favor of the nomination by the Board for election by
stockholders or, if applicable, for the appointment by the Board, of the persons
designated to be directors in accordance with this Agreement.
9
<PAGE>
(d) Peter C. Boylan III ("Boylan") will be deemed to be one of the
initial Liberty Designees, and Joachim Kiener ("Kiener") will be deemed to be
one of the initial News Designees. Prior to the Effective Time, Liberty and News
will each deliver written notice to the other parties hereto designating the
Liberty Designees and the News Designees, respectively.
(e) In the event that as of any date, the Liberty Group has
Transferred (other than to another member of the Liberty Group) a number of
shares of Common Stock representing 90% or more of the number of shares of
Common Stock beneficially owned by such group in the aggregate immediately
following the Effective Time (as such number shall be adjusted for stock-splits,
stock dividends, reverse stock-splits, recapitalizations, reclassifications and
other similar actions taken with respect to the Common Stock), other than in a
manner equivalent to the other stockholders of the Corporation in a transaction
approved by the Board that is either (i) a merger, consolidation, binding share
exchange or similar transaction or (ii) a transaction (including, without
limitation, an exchange offer) in which such stockholders receive securities of
the Corporation or a successor thereto or an entity which owns the Corporation,
then the number of Liberty Designees that the Liberty Stockholder shall be
entitled to designate, remove or replace as contemplated by this Section 2 shall
be reduced by one director who is not an Independent Director; provided,
however, that, subject to Section 2.1(f), if any of the shares so Transferred
were Transferred to any member of the News Group, then the total number of
Liberty Designees and News Designees shall not be reduced and the right to
designate, remove or replace such Liberty Designee shall be allocated to the
News Stockholder thereby increasing the number of News Designees (if it has not
already been so allocated pursuant to Section 2.1(g)).
(f) In the event that as of any date, the News Group has Transferred
(other than to another member of the News Group) a number of shares of Common
Stock representing 90% or more of the number of shares of Common Stock
beneficially owned by such group in the aggregate immediately following the
Effective Time (as such number shall be adjusted for stock-splits, stock
dividends, reverse stock-splits, recapitalizations, reclassifications and other
similar actions taken with respect to the Common Stock), other than in a manner
equivalent to the other stockholders of the Corporation in a transaction
approved by the Board that is either (i) a merger, consolidation, binding share
exchange or similar transaction or (ii) a transaction (including, without
limitation, an exchange offer) in which such stockholders receive securities of
the Corporation or a successor thereto or an entity which owns the Corporation,
then the number of News Designees that the News Stockholder shall be entitled to
designate, remove or replace as contemplated by this Section 2 shall be reduced
by one director who is not an Independent Director; provided, however, that,
subject to Section 2.1(e), if any of the shares so Transferred were Transferred
to any member of the Liberty Group, then the total number of Liberty Designees
and News Designees shall not be reduced and the right to designate, remove or
replace such News Designee shall be allocated to the Liberty Stockholder thereby
increasing the number of Liberty Designees (if it has not already been so
allocated pursuant to Section 2.1(g)).
(g) In the event that shares of Common Stock are Transferred by the
Liberty Group to the News Group or by the News Group to the Liberty Group, then
the right to designate, remove or replace the Liberty Designees and the News
Designees as contemplated by this Agreement shall be allocated between the
Liberty Stockholder and the News Stockholder as they may agree (thereby
increasing or decreasing the number of Liberty Designees and
10
<PAGE>
correspondingly increasing or decreasing the number of News Designees,
accordingly) and if applicable the right to designate Kiener or Boylan, and the
respective successors thereof, or to remove the same pursuant to Section 2.5(c)
hereof shall be assigned if so agreed by one to the other and the Liberty
Stockholder and the News Stockholder shall promptly notify the Corporation and
the other Stockholders thereof. Subject to receiving notice thereof, all other
parties to this Agreement shall fully support such allocation, whether by the
voting of shares or otherwise.
2.2 Removal. Each Stockholder agrees to vote and to cause its
-------
Controlled Related Parties to vote all shares of Common Stock beneficially owned
by it or him (i) for the removal from the Board (with or without cause) of any
director who is a Liberty Designee, News Designee or HY Designee if the Person
that so designated such director (or that succeeded to the right to designate
such director as contemplated by Section 2.1) requests such removal by notice to
the other Stockholders and (ii) except for Cause or as otherwise provided in
clause (i) of this Section 2.2, against the removal of any director designated
pursuant to this Agreement prior to the expiration of his or her term.
2.3 Vacancies. If, as a result of death, disability, retirement,
---------
resignation, removal (with or without cause) or otherwise there shall exist or
occur any vacancy on the Board, the Person entitled to designate (pursuant to
Section 2.1) the director (including any Independent Director) whose death,
disability, retirement, resignation or removal resulted in such vacancy may
designate another individual to fill such vacancy and to serve as a director
(including an Independent Director) of the Corporation.
2.4 Board of Directors and Stockholders Vote.
----------------------------------------
(a) Unless otherwise agreed by Yuen, the Liberty Stockholder and the
News Stockholder, each Stockholder agrees to vote and to cause its Controlled
Related Parties to vote all shares of Common Stock beneficially owned by it or
him, and to use his or its best efforts to cause the respective HY Designees,
Liberty Designees and News Designees to, vote against any proposal to (i)
increase or decrease the size of the Board, (ii) remove any director designated
pursuant to this Agreement prior to the expiration of his or her term except for
cause or pursuant to Section 2.2, (iii) make any change in the size or
composition (i.e., number and type of directors or executive officers) of the
Executive Committee, Compensation Committee, Audit Committee, Special Committee,
TVG Director Committee, GS Director Committee or Tie-breaking Committee, (iv)
remove or replace any TVG Director or, during the Specified Period, any GS
Director, on any committee of the Board except pursuant to Section 2.4(b) and
(c), or (v) make any change in the size or composition (i.e., number and type of
executive officers) of the Office of the Chief Executive.
(b) In any case in which, in accordance with the By-laws or a duly
adopted resolution of the Board, the membership of a committee of the Board is
specified to include TVG Directors, each of the Liberty Stockholder and the News
Stockholder may (i) designate an equal number of such TVG Directors to serve on
such committee (unless they otherwise agree on a different allocation), (ii)
request the removal from such committee at any time with or without cause of any
TVG Director so designated by it, and (iii) designate a replacement for any such
director. Each Stockholder agrees to vote and to cause its Controlled Related
Parties to vote all
11
<PAGE>
shares of Common Stock beneficially owned by it or him, and to use his or its
best efforts to cause the respective HY Designees, Liberty Designees and News
Designees to, vote in favor of such designation, removal and/or replacement. The
initial designees of the Liberty Stockholder and the News Stockholder to the
Executive Committee and the Special Committee are Boylan and Kiener,
respectively.
(c) During the Specified Period, each of the Liberty Stockholder and
News Stockholder agrees to, and to use its best efforts to cause its respective
Liberty Designees and News Designees to, vote in favor of the designation,
removal and/or replacement of any GS Director on any committee of the Board in
accordance with the instructions of Yuen.
2.5 Officers. Unless Yuen, the Liberty Stockholder and the News
--------
Stockholder otherwise agree, each Stockholder agrees to and to cause its
Controlled Related Parties to, and to use his or its best efforts to cause the
respective HY Designees, Liberty Designees and News Designees to,
(a) vote in favor of Yuen's election as Chairman of the Board and
Chief Executive Officer of the Corporation and vote against his removal from any
such position or any diminution of his responsibilities, in each case until the
fifth anniversary of the Effective Time, provided that the Corporation does not
have the right to terminate his employment for Cause or disability pursuant to
the Yuen Employment Agreement;
(b) vote in favor of the election of Leung and any successors to her
offices designated by Yuen as co-President and co-Chief Operating Officer,
member of the Office of the Chief Executive, and Chief Financial Officer of the
Corporation, and for such positions in business units of the Corporation as she
currently holds, and vote against her removal from any such position or any
diminution of her responsibilities, in each case until the fifth anniversary of
the Effective Time, provided that Cause does not exist for such termination;
(c) vote in favor of the election of each of Kiener and Boylan and any
successors to their respective offices designated by News Corp. or Liberty,
respectively, as co-Presidents and co-Chief Operating Officers of the
Corporation and as members of the Office of the Chief Executive, and as chairman
and chief executive officer of those business units of the Corporation set forth
next to their respective names on Exhibit B, and (provided that Cause does not
exist for such termination) vote against the removal of either of them from any
such position or any diminution of their respective responsibilities, in each
case until the fifth anniversary of the Effective Time, unless otherwise
requested by the News Stockholder (with respect to Kiener) or the Liberty
Stockholder (with respect to Boylan).
2.6 Fiduciary Duties. Any covenants or agreements made in this
----------------
Section 2 with respect to actions to be taken by a director in his or her
capacity as such shall be subject to such individual's fiduciary obligations as
a director of the Corporation.
2.7 Termination of Voting Obligations. The obligations of the parties
---------------------------------
pursuant to this Section 2 shall terminate upon the expiration of the Specified
Period. Notwithstanding the foregoing, if the Specified Period expires prior to
the fifth anniversary of the Effective Time as the result of the death or
disability of Yuen, then until the fifth anniversary
12
<PAGE>
of the Effective Time, (i) the Liberty Stockholder and the News Stockholder
(provided that the respective Liberty Designees and News Designees continue to
be elected and appointed, as the case may be, directors of the Corporation as
contemplated by this Section 2) shall continue to be obligated to vote in favor,
and to cause their respective Controlled Related Parties to vote in favor, of
the election or appointment as directors of those persons who were HY Designees
at the time of such expiration of the Specified Period (including the successor
to the directorship held by Yuen) and any successors thereto designated by the
GS Director Committee (as defined in the By-laws as in effect on the Effective
Time), and (ii) the Liberty Stockholder and the News Stockholder (provided that
the respective Liberty Designees and News Designees continue to be elected and
appointed, as the case may be, directors of the Corporation as contemplated by
this Section 2) shall continue to be obligated to vote, and to cause their
respective Controlled Related Parties to vote, in accordance with the provisions
of clause (ii) of Section 2.2, provided that in the case of this clause (ii)
with respect to any HY Designee or his/her successor designated by the GS
Director Committee, the obligation with respect to any such director under
Section 2.2(ii) shall be subject to the agreement of such director to vote in
accordance with the provisions of Section 2.2(ii). Notwithstanding the
immediately preceding sentence, upon the expiration of the Specified Period, the
parties shall have no obligation to vote in favor, or to cause their respective
Controlled Related Parties to vote in favor, of the election or appointment to
any committee of the Board of any HY Designee or GS Director.
SECTION 3. OTHER ARRANGEMENTS
3.1 Certain Restrictions. Each of (i) the Liberty Stockholder, on
--------------------
behalf of the Liberty Group, (ii) the News Stockholder, on behalf of the News
Group, and (iii) Yuen, individually and on behalf of his Controlled Related
Parties, agrees for the benefit of the Corporation, unless otherwise approved by
the Board, that during the Specified Period and provided that, in the case of
the Liberty Stockholder, the Liberty Designees, in the case of the News
Stockholder, the News Designees, and in the case of Yuen, the HY Designees,
continue to be elected and appointed as the case may be, directors of the
Corporation as contemplated by Section 2 of this Agreement and, except as
otherwise permitted by this Agreement, the number of directors and composition
of the Board otherwise continues as contemplated thereby:
(a) Such party will not make a public offer, or solicit, encourage or
propose to effect or negotiate such public offer, to acquire all or part of the
Corporation unless another Person that is not an "affiliate" (as such term is
defined in Rule 12b-2 under the Exchange Act) of any member of the Liberty Group
or of the News Group (in the event the party desiring to make the offer is a
member of the Liberty Group or of the News Group) or of Yuen or his Controlled
Related Parties (in the event the party desiring to make the offer is Yuen or
one of his Controlled Related Parties), makes a bona fide offer to acquire all
or part of the Corporation (whether by tender or exchange offer, merger,
consolidation, binding share exchange, purchase of all or substantially all of
the assets or otherwise), in which event such party may make an offer for a
comparable percentage of the Corporation unless (i) such other person's offer is
hostile, (ii) at the time of such offer the Rights Plan is in effect, and (iii)
after giving effect to such offer (assuming it was successful), either (x) such
Person's ownership would not trigger the Rights Plan or (y) such person's
ownership would trigger the Rights Plan, but the Corporation is contesting such
offer and the Board has not taken any action to permit or facilitate such offer
under the Rights Plan or otherwise; provided, however, that neither AT&T Corp.
-------- -------
nor any of its
13
<PAGE>
affiliates shall be considered an affiliate of Liberty as long as (x) it is not
a Controlled Related Party of Liberty and (y) neither Liberty nor any Controlled
Related Party of Liberty shall have directed or requested, directly or
indirectly, that AT&T Corp. or any of its affiliates to make the offer.
(b) Such party will not, as a stockholder of the Corporation, except
as contemplated by the terms of this Agreement, solicit proxies for the election
of directors to the Board or initiate or propose any stockholder proposal or
participate in or encourage the making of, or solicit stockholders of the
Corporation for the approval of one or more stockholder proposals; provided that
none of Yuen, the Liberty Group or the News Group shall be prohibited from
communicating with a security holder who is engaged in any solicitation of
proxies or who is a participant in any election contest. The foregoing shall
also not apply to a solicitation made in opposition to a solicitation by a third
party making a competing offer for the Corporation as contemplated by Section
3.1(a).
(c) Such party will not act in concert with any other Person or
Persons to become a group within the meaning of Rule 13d-5 under the Exchange
Act with respect to the Corporation, except that each may act in concert with or
participate in a group with its Controlled Related Parties, each other and each
other's Controlled Related Parties and may also act in concert with or
participate in a group with any other Person in connection with the making of a
competing offer permitted by Section 3.1(a).
(d) Such party will not Transfer shares of Common Stock to any Person
who (after giving effect to such Transfer) would, to the knowledge of such
party, be an "Acquiring Person" within the meaning of the Rights Plan. The
foregoing restriction shall not apply to Transfers pursuant to a public offer
made by a Person unaffiliated with such party to acquire more than 50% of the
Common Stock or pursuant to an underwritten registered public offering, in
connection with mergers, consolidations or binding share exchanges or in a
transaction approved by the Board of Directors.
(e) Such party will not seek to challenge the legality of this Section
3.1.
3.2 By-laws. During the Specified Chairman Selection Periods (as
-------
defined in the By-laws as in effect at the Effective Time), in the event that
the provisions in the By-laws providing for the resolution of any tie vote of
the Board or any committee thereof is held invalid or otherwise challenged, each
Stockholder agrees to vote and to cause its Controlled Related Parties to vote
all shares of Common Stock beneficially owned by it or him, and to otherwise use
its or his best efforts to cause their respective HY Designees, Liberty
Designees or News Designees, to amend the By-laws or to otherwise adopt a
mechanism that will preserve the substance of such tie vote resolution
provisions.
SECTION 4. TRANSFERS
4.1 General.
-------
(a) Without the prior written consent of the Liberty Stockholder and
the News Stockholder (provided that at the time thereof the party asserting the
right to consent, as to itself only, satisfies the Minimum Ownership Condition),
Yuen shall not Transfer any shares of
14
<PAGE>
Common Stock beneficially owned by him unless and until he has complied with
this Section 4, except for a Permitted Pledge or a Permitted Transfer. Any
Transfer of shares of Common Stock that is subject to the preceding sentence
shall, unless made in compliance with the preceding sentence, be null and void,
and have no force or effect. Notwithstanding the foregoing, if a tender or
exchange offer is made by any Person as a result of which the Liberty Group or
the News Group would be permitted in accordance with Section 3.1(a) to make a
competing offer or to Transfer any of its shares of Common Stock to the offeror
pursuant to the second sentence of Section 3.1(d), Yuen will be entitled to
Transfer all or any of his shares of Common Stock pursuant to such offer (or any
competing offer) unless the Liberty Stockholder or the News Stockholder agrees
to purchase all and not less than all of the shares of Common Stock so proposed
to be tendered by Yuen at the price per share paid by the bidder in such offer
(or by the successful bidder in the case of competing offers). A Transfer by
Yuen made in connection with a merger, consolidation or binding share exchange
shall not be subject to this Section 4, but Transfers of Shares received as a
result of any such transaction shall be subject to this Section 4.
(b) The Corporation agrees not to record any Transfer of the Common
Stock by Yuen or any transferee of Yuen whose shares are subject to this Section
4 in the stock transfer books of the Corporation unless the Transfer complies
with all applicable provisions of this Agreement.
(c) This Section 4 shall expire on the first to occur of (i) the tenth
anniversary of the Effective Time and (ii) the second anniversary of the date on
which Yuen ceases to be Chairman of the Board and Chief Executive Officer of the
Corporation.
4.2 Offer Procedures.
----------------
(a) If Yuen desires to Transfer all or any portion of the shares of
Common Stock owned by him, he shall first submit a written offer (the "Offer")
to sell the shares so proposed to be sold (the "Offered Shares") to each of the
Liberty Stockholder, provided that the Liberty Group satisfies the Minimum
Ownership Condition, and the News Stockholder, provided that the News Group
satisfies the Minimum Ownership Condition (the "Offerees") at a price per share
(the "Offer Price") payable in cash (or such other consideration as Yuen and a
purchaser of Offered Shares may agree) equal to the average of the Closing
Prices per share of the Common Stock for the five consecutive Trading Days
ending on the Trading Day immediately preceding the date on which the Offer is
given. The Offer shall set forth the aggregate number of Offered Shares, the
manner and time-frame in which such Transfer is proposed to be effected, whether
the Offer is for an expedited sale (a "Fast-Track Sale") subject to Section
4.3(c) and the Offer Price.
(i) If an Offeree desires to accept (or desires to designate any
one or more of its Controlled Related Parties to accept) all or any portion
of the Offer, such Offeree or its designee (an "Electing Holder") shall
notify Yuen in writing of its intention to acquire Offered Shares and the
number of such shares it desires to acquire, and deliver a copy of such
notice to each other Offeree, such notice to be given within four Trading
Days or, in the case of a Fast-Track Sale, within three Trading Days of
receipt of such Offer. Such notice may also include a proposal, which shall
not be binding until
15
<PAGE>
mutually agreed to in writing by the applicable parties, to pay the Offer
Price in consideration other than cash.
(ii) If the Electing Holders have elected to acquire all or any of
the Offered Shares, then the Electing Holders shall have the right to
acquire all or such portion of the Offered Shares as they elected (such
shares that the Electing Holders have the right to acquire, the "Allocable
Shares"), and if such elections in the aggregate exceed the number of
Offered Shares, then such Offered Shares shall be allocated among the
Electing Holders pro rata (based on the number of shares of Common Stock
beneficially owned by the applicable Offeree and its Controlled Related
Parties) until all of the Allocable Shares have been allocated or any
Electing Holder has been allocated the number of Offered Shares that it
desires to acquire, as specified in its notice to Yuen (or in such other
manner as the Electing Holders may agree).
(b) (i) If the Offer is not accepted in full pursuant to Section
4.2(a), Yuen shall have the right to sell the Offered Shares, other than any
Allocable Shares, beginning on the day following the last day to accept the
Offer and (ii) if the purchase of the Allocable Shares by any Electing Holder is
not consummated within the period set forth in Section 4.3(a) for any reason
other than a breach by Yuen of any of his covenants, representations or
warranties that are a condition to consummation of such purchase, without
limiting any rights hereunder, Yuen shall have the right to Transfer the
Allocable Shares that had been allocated to such Electing Holder beginning on
the day following the last day of the period set forth in Section 4.3(a)(iii)
(the applicable of the dates determined in accordance with clauses (i) and (ii)
of this sentence being the "Free-to-Transfer Date"), in each case in the manner
described in the Offer. Any Transfer permitted by the preceding sentence shall
be completed within 30 days (subject to extension for up to 60 days to the
extent required to obtain all required Governmental Approvals) or, in the case
of a proposed Fast-Track Sale, ten (10) Trading Days, after the Free-to-Transfer
Date. If Yuen has not completed the Transfer of shares of Common Stock permitted
by this Section 4.2(b) during the period referred to above, the procedures set
forth in this Section 4.2 shall be repeated with respect to the Transfer of the
balance of such shares.
4.3 Terms and Conditions of Sales.
-----------------------------
(a) Any purchase and sale of Common Stock to an Electing Holder shall
be subject to the following terms and conditions:
(i) Yuen shall be deemed to have represented and warranted that
the Electing Holders will receive good and valid title to the Allocable
Shares free and clear of all Liens of any nature whatsoever except for
Governmental Approvals required for Transfers of shares of Common Stock
generally.
(ii) The closing of the purchase and sale shall be subject to the
satisfaction of the following conditions:
(A) all applicable waiting periods under the HSR Act shall
have expired or been terminated;
16
<PAGE>
(B) all Governmental Approvals expressly required with
respect to the transactions to be consummated at such closing shall have
been obtained, to the extent the failure to obtain such approvals would
prevent Yuen from performing any of his material obligations hereunder or
would result in any material adverse change in, or material adverse effect
on, the Corporation or the Electing Holder;
(C) there shall be no preliminary or permanent injunction or
other order by any court of competent jurisdiction restricting, preventing
or prohibiting the consummation of the transactions to be consummated at
such closing;
(D) the representation and warranty of Yuen contemplated by
clause (i) of this sentence shall be true and correct at the closing of
such sale with the same force and effect as if then made; and
(E) the satisfaction of any other terms or conditions
contained in the written agreement pursuant to which Yuen agrees to accept
consideration other than cash in exchange for Offered Shares.
(iii) Unless otherwise agreed by the applicable parties, the
closing of any purchase and sale of Common Stock pursuant to Section 4.2
shall take place at the principal executive offices of the Corporation at
10:00 a.m. local time on a Business Day selected by the Electing Holders,
provided that such closing shall occur as promptly as practicable, and in
any event (x) in the case of a closing other than a Fast-Track Sale, within
fifteen (15) days after receipt of such Offer, subject to extension for up
to seventy-five (75) days to the extent required to obtain all required
Governmental Approvals and (y) in the case of a Fast-Track Sale, within
three Trading Days of acceptance of the Offer, without extension for
Governmental Approvals.
(iv) Unless the applicable parties agree to the purchase price
being paid in consideration other than cash, the purchase price shall be
payable in United States Dollars by wire transfer of same day funds to an
account at a bank designated by Yuen, such designation to be made no less
than two Business Days prior to the applicable closing. Yuen shall deliver
to each Electing Holder a certificate or certificates evidencing the
Offered Shares being purchased by it, in proper form for transfer to such
Electing Holder, with appropriate stock powers executed in blank attached
and documentary or transfer tax stamps affixed. The Electing Holders shall
be severally, but not jointly, responsible and liable for the purchase of
their respective portions of the Offered Shares.
(b) In furtherance of the rights set forth in this Section 4, the
Corporation and each Stockholder agrees that, on reasonable notice following the
delivery of an Offer, at reasonable times and without interfering with the
business or operations of the Corporation, the Corporation will use commercially
reasonable efforts to assist Yuen and the Electing Holders in obtaining all
necessary Governmental Approvals and third party approvals to any Transfer of
the Offered Shares, including making qualified personnel available for attending
hearings and meetings respecting any consents, approvals and authorizations
required for such Transfer and, at the request of Yuen, making all filings with,
and giving all notices to, third parties and Governmental Authorities that may
be necessary or reasonably required to be made or given by
17
<PAGE>
the Corporation or such Stockholders in order to effect the contemplated
Transfers. The Electing Holders (pro rata in accordance with their relative
share of the Allocable Shares) shall reimburse the Corporation and Yuen for any
and all reasonable expenses incurred by it or him in connection with the
foregoing actions, but only to the extent that the Corporation or Yuen would not
otherwise have incurred such expenses in connection with the transfer by Yuen of
such shares in the manner contemplated by the Offer. Subject to the other
provisions of this Section 4, no Stockholder shall take any action to delay,
impair or impede the receipt of any required consents, approvals or
authorizations. "Commercially reasonable efforts" as used in this Section 4.3
shall not require any party to undertake extraordinary or unreasonable measures
to obtain any consents, approvals or other authorizations, including requiring
such party to make any material expenditures (other than normal filing fees or
the like) or to accept any material changes in the terms of the contract,
license or other instrument for which a consent, approval or authorization is
sought.
(c) Yuen may specify in any Offer that the Offered Shares are proposed
to be sold in a Fast-Track Sale, in which event the shortest time periods for
acceptance and closing shall apply; provided, however, that the Fast-Track Sale
procedure shall not be available (i) to Yuen more frequently than once in any
consecutive twelve-month period, or (ii) with respect to sales of a number of
shares of Common Stock in excess of 2% of the number of outstanding shares of
Common Stock beneficially owned by Yuen at the time of the Offer (assuming for
this purpose the exercise of all vested and unvested options owned by Yuen).
SECTION 5. REGISTRATION
5.1 Demand Registrations.
--------------------
(a) Requests for Registration. At any time after the date which is
-------------------------
six months after the Effective Time, either the Liberty Stockholder on behalf of
the Liberty Group, or the News Stockholder, on behalf of the News Group, may
request that the Corporation effect the registration under the Securities Act
for sale in the manner specified in such request of all or part of the shares of
Common Stock beneficially owned by it. Such request shall be made by furnishing
written notice thereof (a "Demand Notice") to the Corporation setting forth the
number of shares of Common Stock requested to be registered and such holder's
preferred method of distribution. Within ten days after receipt of any Demand
Notice, the Corporation shall give written notice of such Demand Notice to
Liberty and News Corp. Following receipt of notice from the Corporation of a
Demand Notice (the "Corporation Notice"), each such other Stockholder may give
the Corporation a written request to include any or all of the Common Stock
beneficially owned by it in the registration described in the Corporation
Notice, provided that such written request is given within ten days after the
--------
date on which the Corporation Notice is given (with such request stating (i) the
number of shares of Common Stock to be so included, (ii) such other holder's
preferred method of distribution of such shares and (iii) any other information
that the Corporation Notice reasonably requests be included in such notice from
such holder). All registrations requested pursuant to this Section 5.1 are
referred to herein as "Demand Registrations" and all holders requesting
registration of their shares pursuant to this Section 5.1(a) are referred to
herein as "Requesting Holders". The Corporation shall not be required to effect
a Demand Registration unless the aggregate number of shares of Common Stock
demanded to be so registered is at least one percent of the number of shares of
Common
18
<PAGE>
Stock then outstanding (the "Minimum Condition"). If the Minimum Condition is
met, then, subject to Sections 5.1(b), 5.1(c) and 5.1(f) below, the Corporation
shall, as soon as practicable file with the Commission and use all commercially
reasonable efforts to cause to become effective as promptly as practicable, a
registration statement on a form applicable to the sale of securities to the
general public which shall cover the shares of Common Stock requested to be
registered pursuant to such Demand Notices. The Corporation shall not be
required to effect any Demand Registration for a Stockholder after such time as
such Stockholder and its Controlled Related Parties are able to sell all shares
of Common Stock owned by them without restriction (including any volume
limitation) under the Securities Act.
(b) Number of Demand Registrations. Once a Demand Registration has
------------------------------
been effected, the Corporation shall not be obligated to register Common Stock
pursuant to another Demand Registration prior to the expiration of twelve months
from the date on which the previous Demand Registration was declared effective;
provided, however, that a registration will not count as a Demand Registration
- -------- -------
unless it has become effective, and such effectiveness has been maintained under
the Securities Act (and not subject to any stop order, injunction or other order
or requirement of the Commission or other Governmental Authority for any reason)
for the period specified in Section 5.3(a). Each Requesting Holder may, before
any registration statement becomes effective, withdraw its shares of Common
Stock from inclusion therein if the terms of the proposed distribution are not
satisfactory to such Requesting Holder. If after giving effect to such
withdrawal or withdrawals of shares from a Demand Registration the Minimum
Condition would no longer be satisfied, then such registration statement shall
be withdrawn. A registration that is withdrawn prior to effectiveness at the
request of the Requesting Holders that demanded such Demand Registration will
not count as a Demand Registration.
(c) Restrictions on Registrations. The Corporation may postpone for
-----------------------------
up to 90 days after its receipt of a Demand Notice the filing of a registration
statement for a Demand Registration if the Corporation reasonably believes that
such Demand Registration would have a material adverse effect on any proposal or
plan by the Corporation or any of its subsidiaries to engage in any financing,
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other significant transaction and
notifies the Requesting Holders in writing of such postponement; provided that
--------
the Corporation shall have the right to so postpone such filing or effectiveness
only one time during any period of twelve consecutive months.
(d) Underwriting.
------------
(i) Subject to Section 5.1(e), the distribution of the Common
Stock covered by the Demand Registration shall be effected by means of a
firm commitment underwriting, and the right of any Requesting Holder to
registration pursuant to this Section 5 shall be conditioned upon such
Requesting Holder's participation in such underwriting and the inclusion of
such Requesting Holder's Common Stock in the underwriting (unless otherwise
mutually agreed by a majority in interest of the other Requesting Holders)
to the extent provided herein. The Corporation (together with all
Requesting Holders proposing to distribute their Common Stock through such
underwriting) shall enter into an underwriting agreement in customary form
with a managing underwriter of nationally recognized standing selected for
such underwriting
19
<PAGE>
by the Corporation with the approval of the Requesting Holder that has
included the largest number of shares in the Demand Registration, such
approval not to be withheld unreasonably. No Requesting Holder may
participate in any Demand Registration unless such Requesting Holder (A)
agrees to sell its Common Stock on the basis provided in such underwriting
agreement and (B) completes and executes all questionnaires, powers of
attorney, indemnities and other documents required under the terms of such
underwriting agreement.
(ii) Notwithstanding any other provision of this Section 5, if
the managing underwriter advises the Corporation and the Requesting Holders
in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the managing underwriter may exclude shares
requested to be included in such Demand Registration. The number of shares
of Common Stock that may be included in the Demand Registration and
underwriting shall be allocated among the Requesting Holders in accordance
with the provisions of Section 5.1(f). No Common Stock excluded from the
underwriting by reason of the managing underwriter's marketing limitation
shall be included in such Demand Registration.
(iii) If any Requesting Holder participating in a Demand
Registration disapproves of the terms of the underwriting, such Person may
elect to withdraw therefrom by written notice to the Corporation, the
managing underwriter and the other Requesting Holders. If by such
withdrawal a greater number of shares of Common Stock held by other
Requesting Holders may be included in such Demand Registration (up to the
maximum of any limitation imposed by the managing underwriter), then the
Corporation shall offer to all Requesting Holders participating in the
Demand Registration the right to include additional shares of Common Stock,
which additional shares shall be allocated among the Requesting Holders in
accordance with the provisions of Section 5.1(f).
(e) Shelf Registration. If at the time of a Demand Notice, the
------------------
Corporation is eligible to file a registration statement on Form S-3 (or any
equivalent successor form), then Requesting Holders who hold at least 51% of the
shares of Common Stock which are to be included in a Demand Registration may
request that the Demand Registration be effected pursuant to a shelf
registration under Rule 415 of the Securities Act (or successor rule or
regulation); provided, however, that (i) if the Corporation shall reasonably
-------- -------
determine, after consultation with an independent investment banking firm of
nationally recognized standing, that such method of distribution would adversely
affect the public market for the Common Stock, then the Corporation shall not be
obligated to effect the Demand Registration pursuant to such method of
distribution, (ii) during the term of any such shelf registration, the
Corporation may require from time to time that the Requesting Holders refrain
from selling pursuant to such registration statement under the circumstances, in
the manner and for the time period described in Section 5.1(c), and (iii) the
Corporation shall not be required to keep such shelf registration statement
effective for a period greater than twelve months.
(f) Allocation Among Requesting Holders. If the managing underwriter
-----------------------------------
imposes a limit on the number of shares of Common Stock to be included in the
Demand Registration, then each Requesting Holder shall have the right to include
in such Demand
20
<PAGE>
Registration up to its pro rata share (based on the ratio that the number of
shares of Common Stock proposed to be sold by it bears to the total number of
shares of Common Stock proposed to be sold by all Requesting Holders) of the
maximum number of shares permitted by the managing underwriter to be included in
the Demand Registration (the "Maximum Amount").
(g) Inclusion of Shares by the Corporation. If the managing
--------------------------------------
underwriter has not limited the number of shares of Common Stock to be
underwritten or if the number of shares which the Requesting Holders have
requested to be registered is less than the Maximum Amount, then the Corporation
may include securities for its own account, the account of Yuen or for the
account of others in such Demand Registration if the managing underwriter so
agrees and if the number of shares of Common Stock held by Requesting Holders
which would otherwise have been included in such Demand Registration and
underwriting will not thereby be limited. The inclusion of such shares shall be
on the same terms as the registration of shares held by the Requesting Holders.
In the event that the managing underwriter excludes some of the securities to be
registered, the securities to be sold for the account of the Corporation and any
other holders shall be excluded in their entirety prior to the exclusion of any
shares of Common Stock of the Requesting Holders.
5.2 Lockup Agreements. Each Requesting Holder agrees not to effect
-----------------
any public sale or other distribution of Common Stock during the seven days
prior to the effective date of any Demand Registration or during the 180-day
period (or such shorter period as the managing underwriter may require)
beginning on such effective date (except in either case as part of such Demand
Registration), unless the managing underwriter otherwise agrees. The Corporation
agrees not to effect any public sale or other distribution of Common Stock
during the seven days prior to the effective date of any Demand Registration or
during the 180-day period (or such shorter period as the managing underwriter
may require) beginning on such effective date (except in either case as part of
such Demand Registration or pursuant to registrations on Form S-8 or any
successor form), unless the managing underwriter otherwise agrees; provided,
however, that such restriction shall not extend to the issuance or distribution
of shares of Common Stock upon conversion of convertible securities. Each
Requesting Holder understands that stop transfer instructions may be given to
the Corporation's transfer agent to prevent transfers restricted by this Section
5.2 during the applicable period of such restriction.
5.3 Registration Procedures. Whenever the Corporation is obligated
-----------------------
by the provisions of this Agreement to effect a registration of any shares of
Common Stock under the Securities Act, the Corporation shall use commercially
reasonable efforts to effect such registration so as to permit the sale of the
shares of Common Stock covered thereby in accordance with the intended method of
disposition thereof, and pursuant thereto the Corporation will as expeditiously
as possible:
(a) prepare and file with the Commission a registration statement with
respect to such shares and use all commercially reasonable efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed ninety
days (or, in the case of a shelf registration pursuant to Section 5.1(e), twelve
months);
21
<PAGE>
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the sooner to occur of the sale of all such shares or the ninetieth day
following the effective date of such registration statement (or, in the case of
a shelf registration pursuant to Section 5.1(e), the day twelve months following
the effective date) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each Requesting Holder participating in such Demand
Registration and the underwriters such number of copies of such registration
statement (with exhibits), each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and each supplement thereto and such other documents as such seller or
underwriters may reasonably request in order to facilitate the sale of the
shares being sold;
(d) use all reasonable efforts to register or qualify the shares being
sold under such other securities or blue sky laws of such jurisdictions in the
United States as any seller reasonably requests, to the extent such registration
or qualification may be required by applicable law, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the shares owned
by such seller; provided, however, that the Corporation will not be required to
-------- -------
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) conform its
capitalization or the composition of its assets to the securities or blue sky
laws of such jurisdictions, (iii) consent to general service of process in any
such jurisdiction, (iv) 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
shares registered by the Demand Registration, or (v) subject itself to taxation
in any jurisdiction where it has not theretofore done so;
(e) cause all such shares to be listed or authorized for quotation on
each securities exchange or automated quotation system on which similar
securities issued by the Corporation are then listed or quoted;
(f) notify each seller of such shares promptly after it shall receive
notice thereof, of the time when such registration statement (or any post-
effective amendment thereto) has become effective and, when the filing of a
post-effective amendment to such registration statement or a supplement to any
prospectus forming part of such registration statement is required, when the
same is filed;
(g) notify each seller of such shares of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(h) prepare and file with the Commission, promptly upon the request of
any seller of such shares, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel selected by the holders
of a majority of the shares
22
<PAGE>
being registered, is required under the Securities Act in connection with the
distribution of shares by such seller;
(i) notify each seller of shares when the Corporation becomes aware of
the happening of any event as a result of which the prospectus (as then in
effect) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and prepare and
promptly file with the Commission each amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such registration statement or
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading;
(j) advise each seller of such shares, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for such purpose and promptly use
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued; and
(k) if applicable, make available to the seller of such shares a
consolidated earnings statement (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act beginning within six months
after the effective date of each registration statement, which statement shall
cover the 12-month period described in such Section 11(a), provided, however,
-------- -------
that the Corporation shall be deemed to have complied with this clause (k) if it
has complied with Rule 158 promulgated under the Securities Act.
5.4 Expenses. Each Requesting Holder that participates in a Demand
--------
Registration (including a Demand Registration that is withdrawn prior to
becoming effective) shall pay all underwriting discounts and commissions and any
transfer taxes attributable to the sale of such Requesting Holder's shares, the
fees and expenses of counsel for such Requesting Holder, and any other out-of-
pocket expenses of such Requesting Holder incurred in connection with its
participation in such Demand Registration. The Corporation shall pay all
expenses connected with the registration or qualification of such shares for
sale pursuant to the first two Demand Registrations, including the registration
fee, listing fees, the fees of its counsel and accountants and any printing
costs; provided, that, in the event a Demand Registration is withdrawn at the
request of the Requesting Holders prior to becoming effective, each Requesting
Holder shall be liable for a pro rata portion of such expenses equal to the
percentage that the number of shares of such Requesting Holder subject to such
Demand Registration represents of the total number of shares so subject. For
Demand Registrations subsequent to the first two Demand Registrations, each
Requesting Holder shall be liable for a pro rata portion of the expenses
incurred in connection with the registration or qualification of its shares for
sale, including the registration fee, listing fees, and printing costs (but
excluding the fees of the Corporation's counsel and accountants), equal to the
percentage that the number of shares of such Requesting Holder subject to such
Demand Registration represents of the total number of shares so subject. To the
extent that the Corporation has included shares in a Demand
23
<PAGE>
Registration pursuant to Section 5.1(g), the Corporation shall pay all
underwriting discounts and commissions and any transfer taxes attributable to
the sale of such shares so included by the Corporation.
5.5 Obligations of Requesting Holders Participating in Demand
---------------------------------------------------------
Registration. Each Requesting Holder agrees to furnish to the Corporation such
- ------------
written information concerning such Requesting Holder as may reasonably be
requested by the Corporation which is necessary in connection with any Demand
Registration, and each Requesting Holder agrees to otherwise cooperate with the
Corporation in connection with any Demand Registration. Each Requesting Holder
participating in a Demand Registration agrees to comply with all applicable laws
relating to the offer and sale of the Common Stock, including, to the extent
applicable, Regulation M under the Exchange Act.
5.6 Indemnification and Contribution.
--------------------------------
(a) In the event that the Corporation effects a registration of any
shares owned by a Requesting Holder, such Requesting Holder shall indemnify and
hold the Corporation, and each of its directors and officers and each person, if
any, who controls the Corporation within the meaning of the federal securities
laws (the "Corporation Indemnified Parties") harmless against all losses,
liabilities and expenses of any nature whatsoever which the Corporation
Indemnified Parties may incur as a result of or arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement filed by the Corporation, including any prospectus
contained in such registration statement, and any amendment or supplement
thereto (including post-effective amendments) or as a result of or arising out
of or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, which untrue statement or omission or alleged untrue statement or
omission was made in such registration statement, including any prospectus
contained in such registration statement, and any amendment or supplement
thereto (including post-effective amendments) in reliance upon and in conformity
with information furnished in writing by or on behalf of such Requesting Holder
for inclusion therein; provided, however, that such Requesting Holder shall not
-------- -------
be liable to the extent that the losses, liabilities or expenses arise out of or
are based upon (i) the use by the Corporation or another Requesting Holder that
is not a Controlled Related Party of the first Requesting Holder of any
prospectus after such time as the obligation of the Corporation to keep the same
effective and current has expired or (ii) the use by the Corporation or another
Requesting Holder that is not a Controlled Related Party of the first Requesting
Holder of any prospectus after such time as the first Requesting Holder has
advised the Corporation that the filing of a post-effective amendment or
supplement thereto is required with respect to any information contained in such
prospectus concerning the first Requesting Holder, except such prospectus as so
amended or supplemented.
(b) In the event that the Corporation effects a registration of any
shares owned by a Requesting Holder, the Corporation shall indemnify and hold
such Requesting Holder, and each of its directors and officers and each person,
if any, who controls the Requesting Holder within the meaning of the federal
securities laws (the "Stockholder Indemnified Parties") harmless against all
losses, liabilities and expenses of any nature whatsoever which such
24
<PAGE>
Stockholder Indemnified Parties may incur as a result of or arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement filed by the Corporation, including any
prospectus contained in such registration statement, and any amendment or
supplement thereto (including post-effective amendments) or as a result of or
arising out of or based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided, however, that the Corporation will not be liable
-------- -------
in any such case to the extent that the losses, liabilities or expenses arise
out of or are based upon (i) any untrue statement or omission or alleged untrue
statement or omission made in such registration statement, including any
prospectus contained in such registration statement, and any amendment or
supplement thereto (including post-effective amendments) in reliance upon and in
conformity with information furnished in writing by or on behalf of such
Requesting Holder to the Corporation for inclusion therein, (ii) the use by such
Requesting Holder of any prospectus after such time as the obligation of the
Corporation to keep the same effective and current has expired, (iii) the use by
such Requesting Holder of any prospectus after such time as the Corporation has
advised the Requesting Holder that the filing of a post-effective amendment or
supplement thereto is required, except such prospectus as so amended or
supplemented, or (iv) the failure of such Requesting Holder to deliver the
prospectus in the form contained in the registration statement at the time
declared effective (to the extent such delivery is required) to the person
asserting any losses, claims, damages, liabilities or judgments caused by any
untrue statement or alleged untrue statement of a material fact contained in a
preliminary prospectus delivered to such person, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such untrue
statement or alleged untrue statement or omission or alleged omission was cured
in such prospectus.
(c) With respect to the indemnities provided above in this Section
5.6, an indemnified party shall, with respect to any claim made against such
indemnified party, notify the indemnifying party in writing of the nature of the
claim as soon as practicable but not more than ten days after the indemnified
party shall have received notice of the assertion thereof before any court or
Governmental Authority. The failure by an indemnified party to give notice as
provided in the foregoing sentence shall not relieve the indemnifying party of
its obligations under this section except to the extent that the indemnifying
party is damaged solely as a result of the failure to give notice. Upon receipt
of notice by an indemnifying party from an indemnified party of the assertion of
any such claim, the indemnifying party shall employ counsel reasonably
acceptable to the indemnified party and shall assume the defense of such claim.
The indemnified party shall have the right to employ separate counsel and to
participate in (but not control) any such action, but the fees and expenses of
such counsel shall be the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized by the
indemnifying party, (ii) the indemnified party shall have been advised by its
counsel in writing that there is a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense of such action (in
which case the indemnifying party shall not have the right to direct the defense
of such action on behalf of the indemnified party) or (iii) the indemnifying
party shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of such counsel shall be at
the expense of the indemnifying party. The indemnifying party shall not, in
connection with any one action or proceeding or separate but substantially
similar or related
25
<PAGE>
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified party or parties and controlling
persons thereof, which firm shall be designated by the indemnified party that
had the largest number of shares included in the applicable registration
statement. An indemnifying party shall not be liable for any settlement of an
action effected without its written consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such action.
(d) If the indemnification provided for in this Section 5.6 is
unavailable to an indemnified party other than by reason of such indemnified
party's failure to comply with the first sentence of paragraph (c) of this
Section 5.6, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the
Requesting Holder(s) on the one hand and of the Corporation on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Requesting Holder(s) on the one hand
and of the Corporation on the other 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 the Requesting Holder(s) or by the Corporation 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 a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include, subject to the limitations set forth in
Section 5.6(c), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
(e) Each of the Requesting Holders and the Corporation agrees that it
would not be just and equitable if contribution pursuant to Section 5.6(d) were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to in Section 5.6(d).
Notwithstanding the provisions of this Section 5.6, each Requesting Holder shall
not be required to contribute any amount in excess of the amount by which the
total price at which the shares were offered to the public exceeds the amount of
any damages which such Requesting Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 6. LEGEND
Each certificate evidencing any of the shares of Common Stock beneficially
owned by a Stockholder shall bear a legend substantially as follows:
26
<PAGE>
"The shares represented by this certificate are subject to the
terms and conditions of a certain Stockholders' Agreement,
effective as of __________, 2000, a copy of which the Corporation
will furnish to the holder of this certificate upon request and
without charge."
Upon surrender to the Corporation of certificates evidencing shares of
Common Stock transferred in compliance with this Agreement, other than to a
Stockholder or another Person who or that in accordance with the terms of this
Agreement shall be bound by this Agreement in whole or in part, the Corporation
shall reissue such certificates to the owner thereof without such legend. Upon
termination of this Agreement and surrender to the Corporation of certificates
evidencing shares of Common Stock, the Corporation shall reissue such
certificates to the owner thereof without such legend.
SECTION 7. REPRESENTATIONS AND WARRANTIES
Each of the parties to this Agreement hereby represents and warrants to
each other party to this Agreement as follows:
(a) Due Organization/Capacity. If such party is not a natural person,
-------------------------
such party is duly incorporated or organized and validly existing under the laws
of its jurisdiction of incorporation or organization and is duly authorized to
do business and is in good standing under the laws of its jurisdiction of
incorporation or organization. If such party is a natural person, such party has
the capacity to enter into this Agreement.
(b) Authority. Such party has full legal right, power and authority
---------
to execute and deliver this Agreement and to carry out the transactions
contemplated hereby. If such party is not a natural person, all corporate and
other actions required to be taken by such party to authorize the execution,
delivery and performance of this Agreement and all transactions contemplated
hereby have been duly and properly taken. No other approval on the part of such
party or any of its shareholders, as the case may be, is necessary to authorize
the execution, delivery and performance of this Agreement and all transactions
contemplated hereby.
(c) Validity. This Agreement has been duly executed and delivered by
--------
such party and constitutes the legal, valid and binding obligation of such
party, enforceable against it in accordance with its respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other applicable laws affecting creditor's
rights generally.
(d) No Violation. The execution and delivery by such party of this
------------
Agreement does not, and the performance by it of its respective obligations
under this Agreement will not, result in a violation of, or result in the breach
of any provision of, or conflict with, or result in the creation of any Lien
upon any of its assets pursuant to, or cause any acceleration, default or
similar adverse effect under any material agreements to which such party is a
party; nor shall such execution, delivery and performance by such party require
any Governmental Approval or third party approval, except for those which have
been obtained.
(e) Transaction Costs. All transaction costs relating to the
-----------------
transaction described herein which have been incurred by such party have been,
or will be, paid solely by
27
<PAGE>
such party and such party acknowledges that it is not entitled to be reimbursed
by any other party for any of such transaction costs.
SECTION 8. NON-COMPETE
Until the first to occur of (i) the fifth anniversary of the effective date
hereof and (ii) (x), in the case of Liberty, such time as no Liberty Designees
continue to serve on the Board and (y), in the case of News Corp., such time as
no News Designees continue to serve on the Board, each of Liberty and News Corp.
hereby covenants and agrees with and for the sole benefit of each other and the
Corporation that the Corporation will be the exclusive vehicle through which
such party, directly or indirectly through its Subsidiaries or Controlled
Affiliates, conducts program guide business (print, electronic or otherwise),
whether within or outside the United States, other than the NDS Business. The
provision of program guides to customers of the multichannel video programming
delivery ("MVPD") systems of Liberty or News Corp. or a Subsidiary or Controlled
Affiliate of Liberty or News Corp. shall not be deemed to be the conduct of a
program guide business by such party or any of its Subsidiaries or Controlled
Affiliates in violation of its covenant made in this Section 8 regardless of the
source of such program guide, but shall be subject to any contrary provision of
any affiliation or carriage agreement between such party, Subsidiary or
Controlled Affiliate, on the one hand, and the Corporation or any of its
Subsidiaries, on the other hand. The parties hereto acknowledge that British
Sky Broadcasting Group Plc ("BskyB") is not a Controlled Affiliate of News Corp.
News Corp. agrees, however, that for so long as it is bound by this Section 8,
it will vote or cause to be voted all shares of stock of BskyB owned by it
directly or through one or more of its subsidiaries against any transactions
that would result in BskyB conducting any guide business (print, electronic or
otherwise), whether within or outside the United States (other than the
provision of guides to customers of its MVPD systems), to the extent that any
such matters are submitted to a vote of stockholders of BskyB.
SECTION 9. MISCELLANEOUS
9.1 Waivers. No course of dealing will be deemed to amend or
-------
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
9.2 Specific Performance. In the event of a breach or a threatened
--------------------
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach, in addition to being entitled
to exercise all rights granted by law, including, without limitation, recovery
of damages, will be entitled to specific performance of its rights under this
Agreement. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that (i) any remedy at
law, including monetary damages, for breach of any such provision will be
inadequate compensation for any loss, and (ii) any defense in any action for
specific performance that a remedy at law would be adequate is waived.
28
<PAGE>
9.3 Remedies Cumulative. The rights and remedies set forth in this
-------------------
Agreement are cumulative, and are not intended to be exclusive of any right or
remedy provided in this Agreement, by law, in equity or otherwise. Except as
provided in this Agreement, all legal remedies (such as monetary damages) as
well as all equitable remedies (such as specific performance) will be available
for any breach or threatened breach of any provision of this Agreement.
9.4 Attorneys' Fees. If any party to this Agreement or the
---------------
Corporation retains counsel for the purpose of enforcing or preventing the
breach or any threatened breach of any provision of this Agreement or for any
other remedy relating to it, then the prevailing party will be entitled to be
reimbursed by the non-prevailing party for all costs and expenses reasonably so
incurred (including reasonable attorneys' fees, costs of bonds and fees and
expenses for expert witnesses).
9.5 Execution. This Agreement may be signed in counterparts or with
---------
detachable signature pages. Each counterpart will be considered an original
instrument, but all of them in the aggregate will constitute one agreement.
9.6 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be delivered personally, telecopied (if receipt of which is
confirmed by the person to whom sent), sent by a nationally recognized overnight
delivery service or mailed by registered or certified mail (if return receipt is
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice) (notice shall be deemed given
upon receipt, if delivered personally, by overnight delivery service or by
telecopy, or on the third business day following mailing, if mailed):
(a) If to Liberty, to it at:
9197 South Peoria Street
Englewood, Colorado 80112
Attention: General Counsel
Telephone: (720) 875-5400
Telecopier: (720) 875-5443
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attention: Elizabeth M. Markowski
Telephone: (212) 705-5000
Telecopier: (212) 705-5125
29
<PAGE>
(b) If to News Corp., to it at:
c/o News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attention: Arthur M. Siskind
Senior Executive Vice President
and Group General Counsel
Telephone: (212) 852-7007
Telecopier: (212) 768-2029
with a copy to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Joel I. Papernik
Telephone: (212) 476-8364
Telecopier: (212) 697-6686
(c) if to Yuen, to him at:
135 North Los Robles Avenue
Suite 800
Pasadena, California 91101
Telephone: (626) 792-5700
Telecopier: (626) 792-2462
with a copy to:
Covington and Burling
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20009
Attention: Ralph C. Voltmer, Jr.
Telephone: (202) 662-5479
Telecopier: (202) 778-5479
with a copy to:
(d) if to the Corporation, to it at
135 North Los Robles Avenue
Suite 800
Pasadena, California 91101
Attention: General Counsel
Telephone: (626) 792-5700
Telecopier: (626) 792-2462
30
<PAGE>
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Drive
Suite 1700
Newport Beach, CA 92660
Attention: David Krinsky
Telephone: (949) 823-7902
Telecopier: (949) 823-6994
9.7 Severability. Wherever possible each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law. However, if for any reason any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable in any respect, such
action will not affect any other provision of this Agreement. In such event,
this Agreement will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.
9.8 Entire Agreement. This Agreement contains the entire agreement
----------------
and understanding of the Persons that are parties to this Agreement and the
Corporation concerning its subject matter.
9.9 Binding Effect. This Agreement is binding upon, and inures to
--------------
the benefit of, the Persons that are parties to this Agreement, their successors
and permitted assigns.
9.10 Governing Law. This Agreement shall be governed by the laws of
-------------
the State of Delaware applied to contracts made and wholly performed in such
State, without regard to principles governing conflicts of law which would apply
the laws of a jurisdiction other than the State of Delaware. Any action to
enforce any provision of this Agreement may be brought only in a court in the
State of Delaware or in the United States District Court in the District of
Delaware. Each party agrees to submit to the general jurisdiction of such courts
and to accept service of process at its address for notices pursuant to this
Agreement in any such action or proceeding brought in any such court and hereby
waives any claim that such action or proceeding brought in any such court has
been brought in an inconvenient forum.
9.11 Waiver of Jury Trial. Each party waives, to the fullest extent
--------------------
permitted by applicable law, any right it may have to a trial by jury in respect
of any action, suit or proceeding arising our of or relating to this Agreement.
9.12 Interpretation. As used herein, except as the context may
--------------
otherwise require, "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; "hereof," "herein," "hereunder" and
comparable terms refer to the entirety hereof and not to any particular section
or other subdivision hereof or attachment hereto; references to any gender
include the other; the singular includes the plural and vice versa; references
to any agreement or other document or to any statute or regulation are to such
agreement, document, statute or regulation as amended and supplemented from time
to time (and, in the case of a statute or regulation, to any successor
provisions); and references to "Section" or another subdivision or to "Exhibit"
are
31
<PAGE>
to a section or subdivision of, or to an Exhibit to, this Agreement. Any
reference in this Agreement to a "day" or number of "days" (without the explicit
qualification of "Business") shall be interpreted as a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or given on,
the next Business Day.
9.13 Term. This Agreement will expire (i) in full on the tenth
----
anniversary of the Effective Time and (ii) as to any particular Section or
subsection hereof on such earlier date as may be specified therein.
9.14 Controlled Related Parties. Exhibit C sets forth for each party
--------------------------
the Controlled Related Parties of such party which own or have the right to
acquire Common Stock at the Effective Time and the number of shares of Common
Stock which such Person owns or has the right to acquire. Each party shall
promptly notify the Corporation if such party or any of its Controlled Related
Parties effects any transaction which would cause Exhibit C to be incorrect at
such time and shall provide a corrected Exhibit C to the Corporation. Upon
receipt of such corrected Exhibit C, the Corporation shall promptly send to all
parties to this Agreement a revised Exhibit C which shall be deemed to be
Exhibit C to this Agreement.
9.15 Assignment. Except as otherwise expressly provided herein,
----------
neither this Agreement nor any of the rights or obligations hereunder may be
assigned by any party without the prior written consent of the other parties
hereto. Notwithstanding the foregoing, (i) each of Liberty and News Corp. and
its respective permitted assigns pursuant to this clause (i) shall have the
right to assign its rights and obligations under this Agreement to any other
Person within the meaning of Liberty, News Corp., Liberty Group or News Group,
and (ii) each of Liberty, News Corp. and its respective permitted assigns
pursuant to clause (i) shall have the right to assign its rights and obligations
under Section 5 in connection with a sale of Common Stock to a third party,
provided that it furnishes to the Corporation written notice of the name and
address of such assignee and the number of securities with respect to which such
rights and obligations under Section 5 are being assigned. Any assignee
asserting rights under Section 5 shall be bound by Section 5 and any other
applicable provisions of Section 9 of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
LIBERTY MEDIA CORPORATION
By: /s/ ROBERT R. BENNETT
------------------------------------
Name: Robert R. Bennett
Title: President and Chief Executive
Officer
32
<PAGE>
THE NEWS CORPORATION LIMITED
By: /s/ ARTHUR SISKIND
--------------------------------
Name: Arthur Siskind
Title: Senior Executive Vice
President
GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ HENRY C. YUEN
---------------------------------
Henry C. Yuen
Chairman of the Board
/s/ HENRY C. YUEN
---------------------------------
HENRY C. YUEN
33
<PAGE>
EXHIBIT A
Ownership of Shares
<PAGE>
EXHIBIT B
Positions
Joachim Kiener:
Business Unit Position
------------- --------
TV Guide Magazine Group Chairman/CEO
TV Guide Entertainment Group Co-Chairman/Co-CEO (with Boylan)
TV Guide Networks Group Chairman/CEO
TV Guide Direct Co-Chairman/Co-CEO (with Boylan)
TV Guide Data Services Chairman/CEO
TV Guide Media Sales Chairman/CEO
Peter Boylan:
Business Unit Position
------------- --------
United Video Group Chairman/CEO
TV Guide Entertainment Group Co-Chairman/Co-CEO (with Kiener)
TV Guide Interactive Chairman/CEO
TV Guide Direct Co-Chairman/Co-CEO (with Kiener)
TV Guide Affiliate Sales Chairman/CEO
TVG Intl. Chairman/CEO
TV Guide Ventures Chairman/CEO
TV Guide Enterprise Solutions Chairman/CEO
<PAGE>
EXHIBIT C
Controlled Related Parties
<PAGE>
EXHIBIT 99.10
AMENDMENT NO. 1 TO
------------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
This AMENDMENT NO. 1 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Amendment") is entered into as of October 4, 1999 by and among Gemstar
---------
International Group Limited, a British Virgin Islands corporation ("GIGL"),
Gemstar Development Corporation, a California corporation ("Company"), and Henry
C. Yuen ("Employee").
WITNESSETH:
WHEREAS, GIGL, Company and Employee are parties to that certain Amended and
Restated Employment Agreement, entered into as of January 7, 1998, (the
"Employment Agreement") pursuant to which Employee is currently employed by GIGL
and Company.
WHEREAS, GIGL is a party to that certain Agreement and Plan of Merger of
even date herewith pursuant to which (i) GIGL has agreed to reincorporate under
the laws of the State of Delaware (the "Reincorporation") and (ii) G Acquisition
Subsidiary Corp., a Delaware corporation and a wholly owned subsidiary of GIGL
(which will remain a wholly owned subsidiary of the successor to GIGL following
the Reincorporation), will merge (the "Merger") with and into TV Guide , Inc. a
Delaware corporation ("Target") and Target will become a direct or indirect
wholly owned subsidiary of the successor to GIGL.
WHEREAS, in recognition of the increased duties and responsibilities which
Employee will bear following the Merger, Company and Employee desire to amend
the Employment Agreement, subject to the consummation of the Merger, as provided
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree to amend the Employment Agreement as
follows:
1. Reincorporation of GIGL. The Employment Agreement, as amended by this
-----------------------
Amendment, shall continue to bind the successor to GIGL following the
Reincorporation to the same extent as if such successor were the original
signatory thereto and hereto and all references in the Employment Agreement and
in this Amendment to "GIGL" shall, from and after the effective date of the
Reincorporation, be deemed to refer to the successor corporation to GIGL in the
Reincorporation.
2. Amendment of Section 1(a)(i) of the Employment Agreement. Subject to
--------------------------------------------------------
the consummation of the Merger, the first sentence of Section 1(a)(i) of the
Employment Agreement shall be amended to read in its entirety as follows:
"Company agrees to employ Employee and Employee agrees to serve Company, in
accordance with the terms of this Agreement, for an initial term commencing
with an effective date of October 1, 1997 and ending 48 months after the
effective date of the merger of G Acquisition Subsidiary Corp., a Delaware
corporation, with and into TV Guide , Inc., a Delaware corporation (the
"Merger"), pursuant to the terms of
<PAGE>
that certain Agreement and Plan of Merger dated October 4, 1999 (the
"Initial Term"), unless this Agreement is earlier terminated in accordance
with the provisions which follow."
3. Amendment of Section 2 of the Employment Agreement. Subject to the
--------------------------------------------------
consummation of the Merger, the second sentence of the first paragraph of
Section 2 of the Employment Agreement shall be amended to read in its entirety
as follows:
"GIGL and Employee agree that, subject to the provisions of this Agreement,
GIGL will employ Employee as President, Chief Executive Officer and
Chairman of the Board of GIGL"
4. Amendment of Section 3(a)(ii) of the Employment Agreement. The
---------------------------------------------------------
parties agree that the provisions of Section 3(a)(ii) of the Employment
Agreement providing for annual increases in Employee's base salary shall remain
in full force and effect for the fiscal year ending March 31, 2000 and that
Employee's base salary shall be increased on June 1, 2000 in accordance with the
provisions of Section 3(a)(ii) as in effect immediately prior to the date of
this Amendment. Subject to the consummation of the Merger, Section 3(a)(ii) of
the Employment Agreement shall be amended to provide as follows for the fiscal
year ending March 31, 2001 and the Compensation Period beginning June 1, 2001
and all future fiscal years and Compensation Periods:
"On June 1 of each Compensation Period commencing June 1, 2001, the
Base Salary for such Compensation Period shall be adjusted by adding to the
Base Salary for the previous Compensation Period the amount obtained by
multiplying the Base Salary for the previous Compensation Period by the
positive percentage, if any, equal to the Adjusted Percentage (as defined
below).
For purposes of this Agreement, the "Adjusted Percentage" means the
percentage equal to the product of (i) the sum of "X" plus "Y," multiplied
by (ii) twelve and one-half percent (.125), where "X" is the percentage
increase per outstanding share, if any, from the previous fiscal year in
GIGL's consolidated earnings before interest, taxes, depreciation and
amortization ("EBITDA"), as shown on the consolidated financial statements
of GIGL (the "Financial Statements"); and "Y" is the percentage increase
per outstanding share, if any, from the previous fiscal year in that
portion of GIGL's consolidated EBITDA attributable to the businesses being
conducted by GIGL and its subsidiaries prior to the Merger, including the
VCR Plus+ licensing business, electronic program guide licensing business
(both consumer electronics sector and service provider sector), and all
advertising, promotion, linking and transaction revenues associated with
electronic program guide and its related services (including those received
as revenue sharing under license agreements).
In computing the Adjusted Percentage (for the purposes of this Section 3(a)
as well as for the purposes of Section 3(b) and 3(c) hereof, and Schedule I
hereto), the parties acknowledge that it is their intention to compute the
increase, if any, in EBITDA or any portion thereof from one fiscal year to
the next fiscal year on a basis which fully
2
<PAGE>
reflects the Merger in both fiscal years being compared. Accordingly, if
for any reason (e.g., a change in fiscal year or the consummation of the
Merger after March 31, 2000) the full effects of the Merger are not
included in the first of the two fiscal years being compared in determining
the Adjusted Percentage, GIGL, Company and Employee shall work together in
good faith to adjust the computation of EBITDA appropriately to ensure that
the Adjusted Percentage is determined in a manner consistent with the
intentions of the parties."
5. Amendment of Section 3(b)(i) of the Employment Agreement. The parties
--------------------------------------------------------
agree that the provisions of Section 3(b)(i) of the Employment Agreement
providing for the payment of Employee's annual Merit Bonuses shall remain in
full force and effect for the fiscal year ending March 31, 2000 and that
Employee's Merit Bonus for such fiscal year shall be computed and paid in
accordance with the provisions of Section 3(b)(i) as in effect immediately prior
to the date of this Amendment. Subject to the consummation of the Merger,
Section 3(b)(i) of the Employment Agreement shall be amended to provide as
follows for the computation and payment of Employee's Merit Bonuses, if any, for
the fiscal year ending March 31, 2001 and for all future fiscal years (or
portions thereof) ending thereafter:
"Within fifty (50) days following the end of each fiscal year ending
March 31 of the Company (or portion thereof) during the term of this
Agreement ("Fiscal Year"), commencing with the fiscal year ending on March
31, 2001, the GIGL Board shall approve the payment to Employee of a merit
bonus (the "Merit Bonus") equal to the Adjusted Percentage of the Base
Salary. GIGL shall immediately inform Employee of the amount, if any, of
the Merit Bonus."
6. Amendment of Schedule I to the Employment Agreement. The parties
---------------------------------------------------
agree that the provisions of Section 3(c) of the Employment Agreement providing
for the payment of Employee's Annual Incentive Bonuses in accordance with the
terms of Schedule I to the Employment Agreement, shall remain in full force and
effect for the fiscal year ending March 31, 2000 and that Employee's Annual
Incentive Bonus for such fiscal year shall be computed and paid in accordance
with the provisions of such Section 3(c) and such Schedule I as in effect
immediately prior to the date of this Amendment. Subject to the consummation of
the Merger, paragraph (a) of Schedule I to the Employment Agreement shall be
amended to provide as follows for the computation and payment of Employee's
Annual Incentive Bonus, if any, for the fiscal year ending March 31, 2001 and
all future fiscal years:
"(a) Subject to the terms and conditions of this Agreement, and in
addition to the Base Salary, Merit Bonus and other Additional Benefits to
which Employee may otherwise be entitled from Company, at the end of each
Fiscal Year (or portion thereof) during the term of the Agreement, Employee
shall be deemed to have earned a bonus (the "Annual Incentive Bonus"),
payable by the Company to Employee on the last day of the Compensation
Period in which such Fiscal Year ends (or sooner date as of which this
Agreement terminates, equal to the Adjusted Percentage times the Base
Salary."
3
<PAGE>
Paragraph (b) of Schedule I to the Employment Agreement will have no force or
effect in the computation of Employee's Annual Incentive Bonus for the fiscal
year ending March 31, 2001 or any future fiscal year ending thereafter.
7. Amendment of Section 3(k) of the Employment Agreement. Subject to the
-----------------------------------------------------
consummation of the Merger, the table included in Section 3(k) of the Employment
Agreement shall be amended as follows: (a) all amounts in the "Cash Maximum"
column of such table for the Compensation Periods ending March 31, 2002 and
thereafter shall be increased by twenty five percent (25%) and (b) such table
shall be extended to provide that the Cash Maximum amounts for the Compensation
Periods ending March 31, 2006 and for each fiscal year thereafter shall each be
equal to 1.25 times the Cash Maximum amount for the immediately preceding fiscal
year. In the event that GIGL changes its fiscal year, GIGL, Company and
Employee will work together in good faith to adjust the table set forth in
Section 3(k) in an equitable and appropriate manner.
8. Amendment of Section 4(c) of the Employment Agreement. Subject to the
-----------------------------------------------------
consummation of the Merger, the first sentence of the fifth paragraph of Section
4(c) of the Employment Agreement shall be amended to provide that, if Employee
is the prevailing party in any Decision, Employee shall be reinstated as
President and Chief Executive Officer of Company and as President, Chief
Executive Officer and Chairman of the Board of GIGL.
9. Amendment of Section 4(f) of the Employment Agreement. Subject to the
-----------------------------------------------------
consummation of the Merger, the definition of "Constructive Termination" in
Section 4(f) of the Employment Agreement shall be amended to include within the
scope of such definition, without otherwise changing the scope of such
definition in any way, the removal of Employee from the office of Chairman of
the Board of GIGL.
10. Amendment of Section 4(h) of the Employment Agreement. The parties
-----------------------------------------------------
acknowledge that, in connection with the Merger, it is anticipated that Employee
will enter into a shareholders agreement with Liberty Media Corporation and The
News Corporation Limited pursuant to which Employee will grant a right of first
refusal to Liberty Media Corporation and The News Corporation Limited with
respect to certain future sales of GIGL's Ordinary Shares held by Employee.
Subject to the consummation of the Merger, subparagraph (A) of Section 4(h)(i)
of the Employment Agreement shall be amended to read in its entirety as follows:
(A) The acquisition (other than from (i) GIGL directly, (ii) any
stockholder of GIGL who as of January 7, 1998 owned twenty five percent
(25%) or more of GIGL's outstanding Ordinary Shares or (iii) Employee
pursuant to a right of first refusal granted by Employee to Liberty Media
Corporation and The News Corporation Limited pursuant to the terms of a
shareholders agreement entered into by Employee in connection with the
Merger) after January 7, 1998 by any person, entity, or group, within the
meaning of (S)13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of beneficial ownership of twenty five
percent (25%) or more of GIGL's outstanding Ordinary Shares; or"
4
<PAGE>
11. Amendment of Section 6(a) of the Employment Agreement. Subject to the
-----------------------------------------------------
consummation of the Merger, the third sentence of Section 6(a) of the Employment
Agreement shall be amended to read in its entirety as follows:
"For the purpose of this Agreement, Company's business and research or
development referred to in (ii) above shall include (1) the Business
described in the Bylaws of GIGL adopted in connection with the Merger and
(2) the businesses described in Exhibits A and B attached hereto, which
---------- -
may, from time to time, be modified or augmented, but only by resolution of
the Company Board in meetings to which Employee shall be invited to attend,
but at which only non-management directors applying the standard referred
to in (ii) above can vote."
12. Waiver by Employee. The parties acknowledge that (i) in connection
------------------
with the Merger, it is anticipated that certain changes will be made in the
corporate governance of GIGL as set forth in the Bylaws of GIGL to be adopted in
connection with the Merger (the "Proposed Structural Changes"), which changes
shall not include any change in the offices held by Employee or in the
requirement that Employee report to the GIGL Board during the term of this
Agreement, (ii) there may be some ambiguity as to whether the Proposed
Structural Changes, when implemented, would constitute "Constructive
Termination" as such term is defined in Section 4(f) of the Employment Agreement
and (iii) the Merger may constitute a "Change of Control," as such term is
defined in Section 4(h)(i)(D) of the Employment Agreement. Employee hereby
agrees that (x) the provisions of Section 4(f) of the Employment Agreement
notwithstanding, the Proposed Structural Changes, when implemented, shall not be
deemed to constitute "Constructive Termination" as such term is defined in
Section 4(f) of the Employment Agreement and Employee will not, at any time,
assert that he is entitled to the benefits to which he would be entitled upon
Constructive Termination by virtue of the Proposed Structural Changes, when
implemented, and (y) the provisions of Section 4(h)(i)(D) notwithstanding, the
Merger shall not constitute a Change of Control, and Employee will not, at any
time, by virtue or reason of the Merger, assert that he is entitled to the
benefits which would accrue to him upon a Change of Control.
13. Full Force and Effect. Except as expressly amended hereby, the
---------------------
Employment Agreement shall continue in full force and effect in accordance with
the provisions thereof on the date hereof.
14. Section Headings. Section and other headings in this Amendment are
----------------
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Amendment.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
"GIGL"
GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ ELSIE M. LEUNG
-------------------------------------
Elsie M. Leung, Chief Operating
Officer and Chief Financial Officer
By: /s/ STEPHEN A. WEISWASSER
-------------------------------------
Stephen A. Weiswasser, Secretary
"Company"
GEMSTAR DEVELOPMENT CORPORATION
By: /s/ ELSIE M. LEUNG
-------------------------------------
Elsie M. Leung, Chief Financial
Officer
By: /s/ STEPHEN A. WEISWASSER
-------------------------------------
Stephen A. Weiswasser, Secretary
"Employee"
/s/ HENRY C. YUEN
----------------------------------------
HENRY C. YUEN
6
<PAGE>
EXHIBIT 99.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of March 1, 1999,
by and between TV Guide, Inc., a Delaware corporation ("Company"), and Joachim
Kiener ("Employee").
W I T N E S S E T H:
WHEREAS, Company and Employee are parties to an Employment Agreement, entered
into as of March 1, 1999 and a letter agreement entered into as of October 4,
1999 (together, the "Predecessor Agreement"), pursuant to which Employee has
served Company as Chairman and Chief Executive Officer and Member of the Board
of Directors; and
WHEREAS, Company desires to obtain the benefit of continued service by Employee
to Company, and Employee desires to render services to Company; and
WHEREAS, the Board of Directors of Company (the "Board") have determined that
because of Employee's substantial experience and expertise in connection with
the business matters of Company, it is in the best interest of Company to retain
the services of Employee and to provide Employee certain additional benefits;
and
WHEREAS, Company and Employee desire to set forth in this Agreement the terms
and conditions of Employee's future employment with Company; and
WHEREAS, Company and Gemstar International Group Limited, a British Virgin
Islands corporation ("GIGL"), have entered into an Agreement and Plan of Merger,
dated as of October 4, 1999 (the "Merger Agreement") providing for a transaction
in which, upon closing of such transaction (the "Gemstar Closing"), GIGL will
become a Delaware corporation, the Company will become a subsidiary of GIGL, and
GIGL as parent of the combined companies will change its name to TV Guide
International, Inc. ("TV Guide International"); and
WHEREAS, effective upon the Gemstar Closing, TV Guide International will assume
the obligations of the Company hereunder.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties agree to terminate in its entirety the Predecessor
Agreement, and the parties agree as follows:
1. Term and Renewals; Shareholder Approval.
----------------------------------------
(a) Initial Term.
-------------
Company agrees to employ Employee and Employee agrees to serve
Company, in accordance with the terms of this Agreement, for an initial term
commencing with an effective date of March 1, 1999 and ending March 1, 2003
1
<PAGE>
(the "Initial Term"), unless this Agreement is earlier terminated in accordance
with the provisions which follow. Notwithstanding the foregoing, on the
effective date of the Gemstar Closing, the Initial Term shall be extended to the
sixth anniversary of the Gemstar Closing. The term "Employer" as used herein
shall refer to the Company, unless and until the Gemstar Closing occurs, and
thereafter shall refer to TV Guide International.
(b) Renewal.
--------
This Section 1(b) will apply only if the Gemstar Closing occurs
prior to the expiration of the Initial Term. Upon expiration of the Initial
Term, this Agreement shall be automatically renewed for a term of three
additional years (the "Renewal Term"), unless either party gives notice, in
writing, at least twelve (12) months prior to the expiration of the Initial Term
of its desire to terminate this Agreement.
If Employer delivers to Employee the written termination notice
contemplated by this Section 1(b), or if the Initial Term expires without
Employer and Employee having reached an agreement for the continued employment
of Employee by Employer that is satisfactory to Employer and Employee (in their
sole and absolute discretion), such termination or expiration shall be treated
as a termination Without Cause pursuant to Section 4(d) of this Agreement, and
the date of such termination or expiration shall be deemed the date of notice of
termination for purposes of Section 4(d).
(c) Compensation Period; Current Term.
----------------------------------
Each annual period (or portion thereof) during the term of this
Agreement and during any period following termination of Employee's employment
hereunder during which Employer has ongoing obligations hereunder shall be a
distinct and separate compensation period ("Compensation Period"). The
Compensation Period shall be the calendar year, provided, however, that if the
Gemstar Closing occurs, the Compensation Period shall thereafter be the fiscal
year of TV Guide International and any compensation measured with respect to a
Compensation Period hereunder shall be adjusted as appropriate to reflect the
change in the Compensation Period. The then-current term of this Agreement,
whether it is the Initial Term (together with, if the Gemstar Closing occurs,
the Renewal Term if the termination deadline under Section 1(b) has passed
without delivery of the termination notice contemplated thereunder) or the
Renewal Term, shall be known as the "Current Term."
2. Specific Position; Duties and Responsibilities.
-----------------------------------------------
Employer and Employee agree that, subject to the provisions of this
Agreement, Employer will employ Employee and Employee will serve Employer as
Chairman of the Board and Chief Executive Officer, provided, however, that if
the Gemstar Closing occurs, such employment and service shall thereafter be as
Co-President and Co-Chief Operating Officer of TV Guide International, member of
the Office of the Chief Executive of TV Guide International, and Chairman and
Chief Executive Officer of certain TV Guide business divisions which shall
include but not be limited to TV Guide
2
<PAGE>
Magazine Group, TV Guide Networks and TV Guide Media Sales. Employee shall have
such other additional duties and responsibilities befitting the foregoing
positions as the Board shall determine from time to time.
Employee agrees to devote substantially all of his time, energy and
ability to the business of Employer. Nothing herein shall prevent Employee,
upon approval of the Board, from serving as a director, consultant or trustee of
other corporations or businesses that are not in competition with the business
of Employer or in competition with any affiliate of Employer. Such approval of
the Board shall not be unreasonably withheld. If the Gemstar Closing occurs,
nothing herein shall prevent Employee from (i) investing in real estate for his
own account, (ii) becoming a partner or a shareholder in any privately-held
corporation, partnership or other venture not in competition with the business
of Employer or any affiliate of Employer or (iii) becoming a partner or a
shareholder with an equity interest of not more than ten percent (10%) in any
corporation, partnership or other venture whose equity securities are publicly
traded, whether or not such corporation, partnership or other venture is in
competition with the business of Employer or any affiliate of Employer. Nothing
in this Agreement shall restrict the Board from paying and granting to Employee
additional cash compensation and/or grants of stock or stock options from
entities created as joint ventures between Employer (or any of its affiliates)
and third parties as a means of providing further incentives for Employee.
For the term of this Agreement, Employee shall report to the Board of
Directors of Employer; provided, however, that if the Gemstar Closing occurs,
Employee thereafter shall report to the Chief Executive Officer of TV Guide
International.
3. Compensation.
-------------
(a) Base Compensation and Adjustments.
----------------------------------
During the term of this Agreement, Employer agrees to pay Employee a
base salary at the rate of Eight Hundred Fifty Thousand Dollars (US$850,000.00)
per year, provided, however, that from and after the Gemstar Closing, Employer
agrees to pay Employee a base salary at the rate of Eight Hundred Seventy-Five
Thousand Dollars (US$ 875,000.00) per year. Base salary shall be reviewed from
time to time for increase in Employer's sole discretion (provided such increases
shall be made at least annually, each such increase to be in an amount not less
than any percentage increase in the Consumer Price Index). Such base salary in
effect from time to time, including any increases, shall be referred to herein
as "Base Salary."
The base salary shall be earned monthly and shall be payable in
periodic installments no less frequently than monthly in accordance with
Employer's customary practices. Amounts payable shall be reduced by standard
withholding and other authorized deductions.
(b) Annual Incentive Bonus.
-----------------------
Employer shall pay to Employee in respect of each Compensation
Period (or portion thereof) during the term of this Agreement, the incentive
bonus compensation
3
<PAGE>
benefits described in, and in accordance with the terms of, Schedule I to this
Agreement (the "Annual Incentive Bonus"), which is incorporated herein by
reference as though set forth in full.
(c) Stock Options.
--------------
(i) Company has previously granted to Employee options to
acquire three hundred thousand (300,000) shares of
Class A common stock of TV Guide, Inc. at an exercise
price of $25 per share (the "First 1999 Option Grant").
Notwithstanding the otherwise applicable exercise
schedule under the First 1999 Option Grant, if the
Gemstar Closing occurs, (i) upon the date of such
closing, options to acquire two-thirds of the total
number of shares under the First 1999 Option Grant
shall vest and become exercisable immediately and (ii)
subject to other accelerated vesting provisions of the
First 1999 Option Grant agreement, options to acquire
the remaining one-third of the total number of shares
under the First 1999 Option Grant shall vest and become
exercisable ratably (i.e., options on one-fifth of such
remaining one-third of the total shares each year) on
each March 1 of the years 2000 through 2004.
(ii) Effective October 1, 1999, Company has granted to
Employee options to acquire 760,688 shares of Class A
common stock of TV Guide, Inc. (the "Second 1999 Option
Grant"). Options under the Second 1999 Option Grant
shall first vest and become fully exercisable one day
prior to the tenth anniversary of the date of grant
provided that (notwithstanding anything to the contrary
in Section 4 hereof) Employee is then employed by the
Company; provided, however, that if the Gemstar Closing
occurs, options under the Second 1999 Option Grant
shall vest and become exercisable ratably (i.e.,
options on one-sixth of the shares) on each of the
first through the sixth anniversaries of the Gemstar
Closing subject to the accelerated vesting provisions
set forth in the Second 1999 Option Grant agreement.
The exercise price per share under the Second 1999
Option Grant shall be $43.86. Each of the options
issued under the Second 1999 Option Grant shall expire
on the tenth anniversary of the date of grant.
(iii)The options under the First 1999 Option Grant and the
Second 1999 Option Grant shall convert to options for
the purchase of shares of common stock of TV Guide
International upon the occurrence of the Gemstar
Closing. The number of shares issuable upon exercise of
such
4
<PAGE>
options and the exercise price thereof shall be
adjusted as provided in the Merger Agreement. By way of
example, immediately following the Gemstar Closing,
500,000 shares of TV Guide International common stock
shall be subject to purchase at an exercise price of
$66.73 under the Second 1999 Option Grant.
(d) Additional Benefits.
--------------------
Employee shall also be entitled to all rights and benefits for which
Employee is otherwise eligible under any bonus, incentive, participation, stock
option or extra compensation plan, pension plan, profit-sharing plan, life,
medical, dental, disability, or insurance plan or policy or other plan or
benefit that Employer, its subsidiaries or affiliates may provide for Employee
or (provided Employee is eligible to participate therein) for employees of
Employer generally, as from time to time in effect, during the term of this
Agreement. In order to maximize Employee's time availability to Employer, if the
Gemstar Closing occurs, Employer shall also promptly reimburse Employee for the
Grossed-Up Value (as defined below) of all professional fees and expenses
incurred by Employee in connection with (A) the negotiation and documentation of
this Agreement and any amendment thereto, (B) income tax planning and
preparation, and (C) income tax audits and the defense of income tax claims. All
of the benefits described in this Section 3(d) are collectively referred to
herein as the "Additional Benefits." The Additional Benefits shall be provided
at the level commensurate with the office held by Employee at the time and shall
recognize for vesting and eligibility purposes (but not for purposes of
calculating Employee's age or for benefit accrual purposes) Employee's prior
service with Employer to the extent (if any) that such prior service is
recognized under any such plans.
As used in this Agreement, the "Grossed-Up Value" of an amount shall
equal the result obtained by dividing (A) such amount by (B) the difference of
one (1) minus the sum of the highest marginal federal and state personal income
tax rates, the highest Medicare tax rate (expressed as a decimal), the
additional effective income tax rate (expressed as a decimal) resulting from the
receipt of such amount reducing available deductions of Employee, and any other
income, payroll or similar rate of tax (expressed as a decimal) imposed on the
receipt by Employee of such amount.
(e) Vacation.
---------
In each Compensation Period, Employee shall be entitled to an amount
of paid vacation equal to four (4) weeks plus, if the Gemstar Closing occurs, an
additional three (3) days for each Compensation Period (or portion thereof)
previously completed during the term of this Agreement. If the Gemstar Closing
occurs, up to sixty (60) unused vacation days may be carried over from any
Compensation Period to the ensuing Compensation Period, and Employee shall be
paid in cash, on the last day of each Compensation Period, for any unused
vacation days that cannot be carried over to the ensuing Compensation Period at
a rate per day equal to the quotient of Employee's Base
5
<PAGE>
Salary for the just-completed Compensation Period divided by two hundred twenty
(220) (the number of working days in the year).
(f) Professional Organizations and Education.
------------------------------------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall promptly reimburse
Employee for the Grossed-Up Value of (A) the professional and membership fees
and dues incurred by Employee to maintain a membership in, or to belong to, such
professional organizations and societies as may be designated by Employee from
time to time and one (1) social or country club; and (B) the fees and costs
incurred by Employee in attending professional education courses selected by
Employee.
(g) Automobile Allowance.
---------------------
Employer shall provide Employee with a car allowance of (x) prior to
the Gemstar Closing, twelve hundred dollars (US$1200.00) per month and (y) after
the Gemstar Closing, seven hundred and fifty dollars (US$750.00) per month, to
be used for the purchase, lease and maintenance of an appropriate automobile for
his use during the term of Employee's employment hereunder. If Employer leases
or purchases an automobile for Employee's use, Employee shall have the ability
to assume the lease at the end of the term thereof or purchase the automobile at
its residual or depreciated value upon termination of his employment.
(h) Disability Insurance.
---------------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall purchase and keep in
effect, or reimburse Employee for the cost of, one or more policies of
disability insurance reasonably satisfactory to Employee and Employer, providing
benefits substantially equal to those benefits described in Section 3(h) of that
certain Amended and Restated Employment Agreement among Ms. Elsie Leung, GIGL
and Gemstar Development Corporation dated March 31, 1998. Such purchase or
reimbursement shall include payment to Employee of such amount as is necessary
to ensure that Employee receives the Grossed-Up Value of the premiums on such
disability policy (less any amounts paid directly by Employer to the carrier).
Such policy will contain a feature permitting Employee to continue the policy at
his cost (subject to other provisions in this Agreement requiring Employer to
fund such amounts following termination of employment) following any termination
of Employee's employment.
(i) Life Insurance.
---------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall purchase and keep in
effect, or reimburse Employee for the cost of, a policy of life insurance
reasonably satisfactory to Employee and Employer, providing benefits
substantially equal to those benefits described in Section 3(i) of that certain
Amended and Restated Employment Agreement among Ms. Elsie Leung, GIGL and
Gemstar Development Corporation dated March 31,
6
<PAGE>
1998. Such purchase or reimbursement shall include payment to Employee of such
amount as is necessary to ensure that Employee receives the Grossed-Up Value of
the premiums on such life insurance policy (less any amounts paid directly by
Employer to the carrier). Such policy will contain a feature permitting Employee
to continue the policy at his cost (subject to other provisions in this
Agreement requiring Employer to fund such amounts following termination of
employment) following any termination of Employee's employment.
(j) Other Benefits.
---------------
Employee will, from time to time, receive such other benefits as he
may reasonably request that are commensurate with Employee's position and
facilitate performance of his duties under this Agreement.
4. Termination.
------------
The compensation and other benefits provided to Employee pursuant to this
Agreement, and the employment of Employee by Employer, shall be terminated prior
to expiration of the term of this Agreement only as provided in this Section 4:
(a) Disability.
-----------
In the event of Employee's Disability, Employee's employment
hereunder may be terminated by written notice of termination from Employer to
Employee. "Disability" for this purpose means Employee's failure, because of
illness, incapacity or injury which is determined to be total and permanent by a
physician selected by Employer or its insurers and acceptable to Employee or
Employee's legal representative (such agreement as to acceptability not to be
withheld unreasonably), to render the services contemplated by this Agreement,
(x) if the Gemstar Closing does not occur, for an aggregate of 180 days during
any 365-day period or (y) if the Gemstar Closing occurs, for three consecutive
months or for shorter periods aggregating seventy-five (75) or more business
days in any twelve (12) month period. Thereafter, Employer shall pay Employee
all of his previously earned Base Salary and Additional Benefits and (x) if the
Gemstar Closing occurs, shall continue for twenty-four (24) months after the
date of such notice or until expiration of the Current Term, whichever period is
longer, to pay Base Salary to Employee at a rate and time and in an amount and
manner equal to one hundred percent (100%) of the Base Salary payable
immediately prior to the termination and (y) if the Gemstar Closing does not
occur, shall continue for twelve (12) months after termination of employment to
pay to Employee Base Salary at a rate and time and in an amount and manner equal
to one hundred percent (100%) of the Base Salary payable immediately prior to
termination less any proceeds Employee receives from disability insurance
provided by the Company. Thereafter, no further salary shall be paid except to
the extent otherwise expressly provided in Section 4(b). In addition, Employee
shall be entitled to receive payment of the prorated portion of his Guaranteed
Bonus described in Schedule I, if applicable, for the twelve-month period in
which termination due to disability occurs. Upon any such employment termination
pursuant to this Section 4(a), (i) all previously vested stock options and other
stock incentive awards shall remain fully
7
<PAGE>
exercisable for their full term, (ii)if the Gemstar Closing occurs, all stock
options and other stock incentive awards granted to Employee which would become
vested and exercisable for the then current Compensation Period and the next
Compensation Period (and which would not otherwise become vested and
exercisable) shall immediately vest in full and shall remain fully exercisable
for their full term, and (iii) any remaining stock options and other stock
incentive awards that have not otherwise become vested or exercisable shall be
forfeited.
(b) Death.
------
In the event of Employee's death during the term or during the
extended benefit period contemplated by Section 4(a), Employer shall pay to such
person or persons as Employee shall have directed in writing or, in the absence
of a designation, the estate of Employee (the "Beneficiary") all of Employee's
previously earned Base Salary and Additional Benefits and (x) if the Gemstar
Closing occurs, shall continue for twenty-four (24) months after the date of
Employee's death or until expiration of the Current Term, whichever period is
longer, to pay Employee's Base Salary to the Beneficiary at a rate and time and
in an amount and manner equal to one hundred percent (100%) of the Base Salary
payable immediately prior to death and (y) if the Gemstar Closing does not
occur, shall continue for twelve (12) months after the date of Employee's death
to pay Employee's Base Salary to the Beneficiary at a rate and time and in an
amount and manner equal to one hundred percent (100%) of the Base Salary payable
immediately prior to death (provided that the Company may provide this benefit
through the proceeds of individual or group insurance coverage). If Employee's
death occurs while receiving payments under Section 4(a) above, such payments
shall cease and the Beneficiary shall be entitled only to payments and benefits
under this Section 4(b) at one hundred percent (100%) of the rate of Base Salary
in effect immediately prior to the disability. In the event of Employee's death
during the term, Employer shall also pay to the Beneficiary the prorated portion
of Employee's Guaranteed Bonus described in Schedule I, if applicable, for the
twelve-month period in which termination due to death occurs. If the Gemstar
Closing does not occur, then upon Employee's death, all stock options and other
stock incentive awards that shall have vested as of the date of Employee's death
shall remain exercisable for a period of one year following such date (but in no
event for longer than their term). If the Gemstar Closing occurs, then upon
Employee's death all previously vested stock options and other stock incentive
awards shall remain fully exercisable for their full term, any stock options and
other stock incentive awards that would have vested on a date within one year
following Employee's death (assuming Employee had satisfied the other vesting
conditions of such options and awards) shall vest as to that percentage equal to
the percentage of the then applicable one-year vesting period completed prior to
Employee's death, and any remaining options that did not otherwise become vested
or exercisable shall be forfeited. (By way of example, with respect to an
option that was scheduled to vest six months following the date of Employee's
death, 50% of such option will become vested as a result of the preceding
sentence.) This Agreement in all other respects will terminate upon the death
of Employee except as otherwise expressly provided.
8
<PAGE>
(c) For Cause, Right to Appeal.
---------------------------
Employee's employment hereunder shall be terminated, and all of his
unearned rights to receive Base Salary and (subject to the terms of any plans
relating thereto) Additional Benefits hereunder in respect of any period after
such termination shall immediately terminate upon a reasonable determination by
the Board, acting in good faith based upon actual knowledge at such time and, if
applicable, following the notice and cure period or notice and meeting described
in the immediately succeeding paragraph, that Cause for such termination exists.
Prior to the Gemstar Closing, "Cause" means the willful and continued failure to
perform Employee's job duties; or conviction of, or pleading guilty or nolo
contendere to, a felony; or willfully engaging in misconduct, the nature of
which is not prohibited from being the basis of termination under applicable
federal or state law and which is either injurious monetarily to Employer, or
represents a breach of any material affirmative or negative covenant or
undertaking hereunder. Following the Gemstar Closing, "Cause" means that
Employee (i) is engaging or has engaged in acts of fraud, material dishonesty or
other acts of willful misconduct that have had a material adverse effect on the
business of Employer, (ii) has repeatedly and willfully refused to perform his
significant duties hereunder after notice, (iii) has habitually abused any
substance (such as narcotics or alcohol) and such abuse has had a material
adverse effect on the business of Employer or (iv) has been convicted of, or
plead guilty to, an act constituting a felony that has had a material adverse
effect on the business of Employer.
Notwithstanding the foregoing, Employee's employment hereunder shall
not be terminated for Cause pursuant to this Section 4(c) at any time (x) prior
to the Gemstar Closing, unless and until Employee has been previously notified
of such Cause in writing and been given no less than 30 days to cure such Cause,
except that no such notice and opportunity to cure will be required in the case
of Employee's conviction of or pleading guilty or nolo contendere to a felony,
or (y) following the Gemstar Closing, unless and until Employee has received
notice of a proposed termination for Cause and Employee has had an opportunity
to be heard before at least a majority of the members of the Board. Employee
shall be deemed to have had such opportunity if given written notice by any
director acting on behalf of the Board at least seventy-two (72) hours in
advance of a meeting if scheduled in California or ninety-six (96) hours in
advance if such meeting is scheduled outside California. Any actions or
proceedings by Employer pursuant to this Section 4(c) shall be conducted in a
confidential manner and all steps shall be taken to prevent any harm to
Employee's reputation.
Upon any such employment termination pursuant to this Section 4(c),
all stock options and other stock incentive awards previously granted to
Employee and then remaining unvested and, if the Gemstar Closing has not
occurred, all previously vested stock options and other stock incentive awards
not theretofore exercised shall be forfeited, and if the Gemstar Closing has
occurred, all previously vested stock options and other stock incentive awards
shall remain fully exercisable for their full term.
9
<PAGE>
(d) Without Cause.
--------------
Notwithstanding any other provision of this Section 4, excluding the
provisions of Section 4(e), the Board shall have the right to terminate
Employee's employment with Employer at any time, but in the event of any such
termination, other than as expressly provided in Section 4(a), (b) or (c)
herein, or in the event following the Gemstar Closing Employer elects not to
renew the term of this Agreement by giving notice of termination under Section
1(b) hereof (any such termination of Employee's employment under this Section
4(d) being referred to in this Agreement as a termination "Without Cause"),
Employer shall thereafter pay and grant to Employee, in addition to any other
amounts due under this Agreement, the compensation described in the applicable
paragraph below:
(i) If the Gemstar Closing has not occurred prior to the
date of the termination Without Cause, Employee shall
be entitled to the same compensation the Employee would
be entitled to receive pursuant to Section 4(i)(i) if
the Employee quit as provided for thereunder following
a Change of Control.
(ii) If the termination Without Cause occurs following the
Gemstar Closing, on the last day of Employee's
employment, Employee shall be entitled to an amount
equal to the greater of (a) the product of Employee's
then-current Base Salary multiplied by a factor of
three (3), and (b) the product of Employee's then-
current Base Salary multiplied by the number of years,
rounded up, remaining in the Current Term, and Employer
shall thereafter continue to provide to Employee the
Additional Benefits for sixty (60) months from such
last day of employment. Upon any such employment
termination pursuant to this Section 4(d), all stock
options and other stock incentive awards previously
granted to Employee shall immediately vest in full and
shall become fully exercisable for their full term, and
all previously vested stock options and other stock
incentive awards shall remain fully exercisable for
their full term.
If the Gemstar Closing does not occur, and the Company determines
not to renew this Agreement or fails to negotiate a renewal in good faith, all
stock options and stock incentive awards previously granted to Employee shall be
fully vested upon the expiration of the Initial Term.
(e) Required Consents.
-----------------
Notwithstanding any other provision of this Agreement, if the
Gemstar Closing occurs, Employee's employment may not be terminated thereafter
without the consent of Employee unless the members of Employer's Board of
Directors designated
10
<PAGE>
by The News Corporation Limited or its successor (by merger, consolidation,
transfer of assets or otherwise), if any, but excluding the Employee himself and
any TVG Independent Director (as such term is defined in the Bylaws for TV Guide
International in the form annexed to the Merger Agreement) provide written
consent to such termination.
(f) Limited Succession of Additional Benefits Upon Termination.
-----------------------------------------------------------
If the Gemstar Closing occurs and thereafter Employee's services are
terminated hereunder pursuant to Section 4(a) or 4(b) and Employee is no longer
eligible for Additional Benefits (under the terms of any plans relating thereto)
because of such termination, Employee (or in event of death, the Beneficiary)
shall be entitled to and Employer shall provide the Grossed-Up Value of benefits
substantially equivalent to those benefits in the nature of health and welfare
type benefits to which Employee was entitled immediately prior to such
termination for the period (if any) during which Employee (or Beneficiary, as
the case may be) remains entitled to receive the Base Salary under such
sections. During such period, however, Employee shall not be entitled to option,
equity, appreciation, profit sharing, deferred compensation, savings, bonus,
participation, pension, extra compensation and other incentive plan benefits
(except to the extent otherwise expressly provided in any then outstanding
awards to Employee).
(g) Constructive Termination.
-------------------------
A Constructive Termination (defined below) shall be treated as a
termination Without Cause pursuant to Section 4(d) of this Agreement.
For purposes of this Agreement, "Constructive Termination" means the
occurrence of any of the following without Employee's written consent: change of
Employee's position, so that Employee does not hold the applicable positions
indicated under Section 2, failure of Employee to be elected as a member of the
Board of Directors, assignment to Employee of duties or responsibilities
inconsistent with such applicable positions, relocation of Employee's principal
office to a geographic location outside of New York, New York, the requirement
that Employee report to any person or entity other than the Board of Directors
of the Company or, after the occurrence of the Gemstar Closing (should such
closing occur), to the Chief Executive Officer of Employer, or the diminishment
or reduction of any material responsibilities assigned to the Employee at any
time, in each case other than as a result of grounds for termination of
employment for Cause under Section 4(c), for disability under Section 4(a) or
because of death or retirement.
(h) Termination by Employee.
------------------------
Subject to this Section 4(h), Employee shall have the right, in his
sole discretion, to terminate his employment under this Agreement at any time
after expiration of the period ending eighteen (18) months after the date of the
Gemstar Closing, by providing notice, in writing, at least six (6) months prior
to Employee's termination of employment, but in the event of any such
termination following the Gemstar Closing,
11
<PAGE>
Employer shall thereafter pay and grant to Employee, in addition to any other
amounts due under this Agreement, on the last day of Employee's employment, an
amount equal to the Employee's then-current Base Salary. Upon termination by
Employee, all stock options and other stock incentive awards previously granted
to Employee and then remaining unvested shall be forfeited, and all previously
vested stock options and other stock incentive awards shall, if the Gemstar
Closing has occurred, remain fully exercisable for their full term and, if the
Gemstar Closing has not occurred, shall remain exercisable for a period of three
months following such termination (but in no event for longer than their term).
(i) Change of Control.
------------------
(i) A Change of Control of the Company for the purposes of
this Section 4(i)(i) shall mean the closing of a
transaction which has the result that none of (x) The
News Corporation Limited, together with its
subsidiaries and affiliates ("TNCL"), (y) Liberty Media
Corporation, together with its subsidiaries and
affiliates ("Liberty"), or (z) TNCL and Liberty
collectively, owns a majority of the outstanding shares
of voting capital stock of the Company or of its
successor. Notwithstanding the foregoing provisions of
this Section 4(i)(i), no Change of Control shall be
deemed to have occurred under this Agreement by reason
of the Gemstar Closing or any aspect of the
transactions contemplated by the Merger Agreement.
Within a six-month period after the occurrence of a
Change of Control of the Company, Employee shall be
entitled to consider his employment to have been
constructively terminated by the Company and to,
therefore, quit and receive the compensation set forth
below:
(A) Employee shall be entitled to Employee's Base
Salary at the rate in effect at the date of
termination and his Guaranteed Bonus described in
Schedule I through the end of the Current Term,
which shall continue to be paid in accordance with
the Company's payroll policies.
(B) Employee shall be entitled to continue, without
charge, his participation in the Company's
insurance plans including, but not limited to,
individual supplementary health, disability, life
and other similar insurance to the extent such
benefits exist, until the end of the Current Term,
provided, however that such participation shall
terminate at such time as Employee is eligible to
receive
12
<PAGE>
substantially equivalent insurance benefits
through subsequent employment.
(C) Employee shall be entitled to exercise any and all
stock options and other stock incentive awards
which shall have vested as of the date of the
Employee's termination and all unvested stock
options and other stock incentive awards
previously granted which shall immediately vest as
of the date of Employee's termination, for the
earlier of ten years from date of grant or five
years following the termination of employment.
Employee agrees to accept the compensation provided in
this Section 4(i)(i) as liquidated damages in lieu of
any other damages or severance benefits to which he
might be entitled as a result of the termination of his
employment with the Company. Notwithstanding anything
to the contrary contained herein, if Employee accepts
other employment after termination of employment under
this Section 4(i)(i), whether such employment is full-
time, part-time or as an independent contractor or
consultant, the total compensation earned in connection
with such other employment, whether paid to Employee or
deferred for his benefit, for services rendered on or
prior to the end of the Current Term shall be set-off
against the amounts otherwise payable to the Employee
pursuant to this Section 4(i)(i). Promptly upon the
request of the Company, Employee shall provide evidence
satisfactory to the Company of all such other
compensation earned.
(ii) If the Gemstar Closing occurs, the provisions of
Section 4(i)(i) shall cease to apply and shall be
superseded entirely by this Section 4(i)(ii) upon the
date of such closing. From and after the Gemstar
Closing, as used in this Agreement, "Change of Control"
is defined as any of the following acts:
(A) The acquisition (other than from Employer directly
or from any stockholder of Employer who
immediately following the Gemstar Closing owns
twenty-five percent (25%) or more of Employer's
outstanding common stock) after the Gemstar
Closing by any person, entity, or group, within
the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of beneficial ownership of
twenty-five
13
<PAGE>
percent (25%) or more of Employer's outstanding common stock,
other than any such acquisition by TNCL, by Liberty or by TNCL
and Liberty collectively; provided that such acquisition shall
not constitute a Change of Control if, after giving effect
thereto, TNCL and Liberty collectively own a greater percentage
of Employer's outstanding common stock than the acquiring person,
entity or group; or
(B) During any period of two (2) consecutive years following the
Gemstar Closing, individuals who, at the beginning of such
period, constituted the board of directors of Employer (together
with any new directors whose election or appointment to such
board of directors or whose nomination for election by the
stockholders of Employer was approved by Employee or by a vote of
a majority of the directors then still in office who were either
directors at the beginning of such period or whose election,
appointment or nomination for election was previously so approved
or by a vote of a majority of the directors designated by TNCL
and Liberty) cease for any reason to constitute a majority of the
board of directors of Employer then in office; or
(C) Approval by the board of directors or a majority of the
stockholders of Employer of a merger, reorganization, combination
or consolidation whereby the stockholders of Employer immediately
prior to such approval will not, immediately after consummation
of such reorganization, merger, combination or consolidation own
more than fifty percent (50%) of the voting stock of the
surviving entity; or
(D) A liquidation or dissolution of Employer or the sale of all or
substantially all of the assets of Employer.
Employee shall have the right, in his sole discretion, to terminate
his employment under this Agreement at any time during the ninety (90)
days following notice of a Change of Control, and in the event of any
such termination Employer shall thereafter pay and grant to Employee,
in addition to any other amounts due under this Agreement, on the last
day of Employee's employment, an amount equal to the product of
Employee's Base Salary
14
<PAGE>
multiplied by five (5), and Employer shall thereafter continue to
provide to Employee all other elements of compensation under
Section 3 for sixty (60) months from such last day of employment,
except that upon such termination, all unvested stock options and
other stock incentive awards previously granted to Employee shall
immediately vest in full and shall become fully exercisable for
their full term, and all previously vested stock options and
other stock incentive awards shall remain fully exercisable for
their full term.
(iii) Employee's Base Salary and other compensation shall be reviewed
promptly following any Change of Control, whether pursuant to
Section 4(i)(i) or Section 4(i)(ii), and increased (but not
decreased) to reflect any expansion of Employee's duties or areas
of responsibility, as determined in good faith by the Board. In
the event a transaction described in Section 280G(b)(2)(A)(i) of
the Internal Revenue Code of 1986, as amended, occurs with
respect to Employer, any predecessor, successor, direct or
indirect subsidiary or affiliate of Employer, the provisions of
Schedule II shall apply.
5. Business Expenses.
------------------
During the term of this Agreement, Employer shall reimburse Employee
promptly for reasonable business expenditures, whether or not Employer can fully
deduct such expenses according to federal income tax laws.
6. Inventions and Patents.
-----------------------
If the Gemstar Closing occurs, the provisions of this Section 6 shall
thereafter apply. Subject to exceptions under Section 2870 of the California
Labor Code, all inventions, designs, improvements, patents, copyrights, and
discoveries conceived by Employee after the date of the Gemstar Closing and
during the term of this Agreement which are competitive with or related to
existing products or services of Employer or its affiliates or products or
services under active development by Employer or its affiliates, shall be
assigned to Employer. Exhibits A and B attached to the employment agreement
between GIGL and Henry C. Yuen, as the same is to be amended as contemplated by
the Merger Agreement in connection with the Gemstar Closing, contain a
description of Employer's business and the products and services currently under
active development by Employer and its affiliates. Employee will promptly and
fully disclose to Employer all such inventions, designs, improvements, and
discoveries (whether developed individually or with other persons) and shall
take all reasonable steps necessary and required to assure Employer's ownership
thereof and to assist Employer in protecting or defending Employer's proprietary
rights therein. Employee acknowledges hereby receipt of written notice from
Employer pursuant to California Labor Code Section 2872 that this
15
<PAGE>
Agreement (to the extent it requires an assignment or offer to assign rights to
any invention of Employee) does not apply to an invention that qualifies fully
under California Labor Code Section 2870.
7. Indemnity.
----------
To the maximum extent permitted by applicable law, Employer shall indemnify
Employee and hold Employee harmless from and against any and all claims,
liabilities, judgments, fines, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees, costs of investigation and experts,
settlements and other amounts actually incurred by Employee in connection with
the defense of any action, suit or proceeding, and in connection with any appeal
thereon) incurred by Employee in any and all threatened, pending or completed
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (including, without limitation, actions, suits or proceedings
brought by or in the name of Employer), arising, directly or indirectly, by
reason of Employee's status, actions or inaction as a director, officer,
employee or agent of Employer or of an affiliate of Employer so long as
Employee's conduct was in good faith. Employer shall promptly advance to
Employee upon request any and all expenses incurred by Employee in defending any
and all such actions, suits or proceedings to the maximum extent permitted by
applicable law.
8. Miscellaneous.
--------------
(a) Succession; Survival.
---------------------
This Agreement shall inure to the benefit of and shall be binding upon
Employer and its successors and assigns but, without the prior written consent
of Employee, this Agreement may not be assigned other than in connection with a
merger or sale of substantially all the assets of Employer or a similar
transaction in which the successor or assignee assumes (whether by operation of
law or express assumption) all obligations of Employer hereunder, including the
transactions contemplated by the Merger Agreement. The obligations and duties of
Employee hereunder are personal and otherwise not assignable.
(b) Notices.
---------
Any notice or other communication provided for in this Agreement shall
be in writing and sent, if to Company, to:
TV Guide Inc.
TV Guide Plaza
7140 South Lewis Avenue
Tulsa, Oklahoma 74136-5422
ATTENTION: Mr. Charles Butler Ammann,
Senior Vice President and General Counsel
16
<PAGE>
of, if the Gemstar Closing occurs, thereafter to:
TV Guide International, Inc.
135 North Los Robles Avenue
Suite 800
Pasadena, California 91101
ATTENTION: General Counsel
or at such other address as Employer may from time to time in writing designate,
and, if to Employee, at such address as Employee may from time to time in
writing designate (or Employee's business address of record in the absence of
such designation). Each such notice or other communication shall be effective
(i) if given by telecommunication, when transmitted to the applicable number so
specified in (or pursuant to) this Section 8(b) and an appropriate answerback is
received, (ii) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iii) if given by any other means, when actually delivered at such address.
(c) Entire Agreement; Amendments.
-----------------------------
This Agreement contains the entire agreement of the parties relating
to the subject matter hereof and it supersedes the Predecessor Agreement and any
other prior agreements, undertakings, commitments and practices relating to
Employee's employment by Employer or its affiliates except for any and all other
agreements necessary to give effect to the provisions of this Agreement,
including, without limitation, stock option agreements, and agreements relating
to Additional Benefits. No amendment or modification of the terms of this
Agreement shall be valid unless made in writing and signed by Employee and, on
behalf of Employer, by, if prior to the Gemstar Closing, a member of either the
Executive Committee or the Compensation Committee of the Board of Directors (but
excluding Employee) and, if after the Gemstar Closing, the Chief Executive
Officer of Employer or an authorized representative of the Board.
(d) Waiver.
-------
No failure on the part of any party to exercise or delay in exercising
any right hereunder shall be deemed a waiver thereof or of any other right, nor
shall any single or partial exercise preclude any further or other exercise of
such right or any other right.
(e) Choice of Law.
--------------
This Agreement, the legal relations between the parties and any
action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement, the relationship of the parties or the subject matter
hereof shall be governed by and construed in accordance with the internal laws
of the State of Delaware applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines (or, if
17
<PAGE>
the Gemstar Closing occurs, the internal laws of the State of California from
and after such closing).
(f) Arbitration.
------------
This Section 8(f) will apply only if the Gemstar Closing occurs. Any
controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration. Such arbitration shall be held in Los Angeles County, California
in accordance with California Code of Civil Procedure Sections 1282- 1284.2 if
the arbitration occurs at a time when this Agreement is subject to the laws of
the State of California pursuant to Section 8(e) above. In the event either
party institutes arbitration under this Agreement, the party prevailing in any
such arbitration shall be entitled, in addition to all other relief, to
reasonable attorneys' fees relating to such arbitration. The nonprevailing party
shall be responsible for all costs of the arbitration, including but not limited
to, the arbitration fees, court reporter fees, etc.
(g) Confidentiality, Proprietary Information.
-----------------------------------------
Employee agrees to not make use of, divulge or otherwise disclose,
directly or indirectly, any trade secret or other confidential or proprietary
information concerning the business (including, but not limited to its products,
employees, services, practices or policies) of Employer or any of its affiliates
of which Employee may learn or be aware as a result of Employee's employment
during the term of this Agreement or prior thereto as shareholder, employee,
officer or director of or consultant to Employer and its predecessors, except to
the extent such use or disclosure is (i) necessary to the performance of this
Agreement and in furtherance of Employer's best interests, (ii) required by
applicable law, (iii) lawfully obtainable from other sources, or (iv) authorized
in writing by Employer. The provisions of this Section 8(g) shall survive the
expiration, suspension or termination, for any reason, of this Agreement.
(h) Trade Secrets.
--------------
Employee, prior to and during the term of employment, has had and will
have access to and become acquainted with various trade secrets, consisting of
software, plans, formulas, patterns, devices, secret inventions, processes,
customer lists, contracts, and compilations of information, records and
specifications that are owned by Employer or by its affiliates and regularly
used in the operation of their respective businesses and that may give Employer
an opportunity to obtain an advantage over competitors who do not know or use
such trade secrets. Employee agrees and acknowledges that Employee has been
granted access to these valuable trade secrets only by virtue of the
confidential relationship created by Employee's employment and Employee's prior
relationship to, interest in and fiduciary relationships to Employer and its
predecessors. Employee shall not disclose any of the aforesaid trade secrets,
directly or indirectly, or use them in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of
employment by Employer and for its benefit.
18
<PAGE>
All records, files, documents, drawings, specifications, software,
equipment, and similar items relating to the business of Employer or its
affiliates, including without limitation all records relating to customers (the
"Documents"), whether prepared by Employee or otherwise coming into Employee's
possession, shall remain the exclusive property of Employer or such affiliates
and shall not be removed from the premises of Employer or its affiliates under
any circumstances whatsoever without the prior consent of a senior executive
officer of Employer. Upon termination of employment, Employee agrees to promptly
deliver to Employer all Documents in the possession or under the control of
Employee.
(i) Severability.
-------------
If any provision of this Agreement is held invalid or unenforceable,
the remainder of this Agreement shall nevertheless remain in full force and
effect, and if any provision is held invalid or unenforceable with respect to
particular circumstances, it shall nevertheless remain in full force and effect
in all other circumstances, to the fullest extent permitted by law.
(j) Withholding; Deductions.
------------------------
All compensation payable hereunder, including salary and other
benefits, shall be subject to applicable taxes, withholding and other required,
normal or elected employee deductions.
(k) Section Headings.
-----------------
Section and other headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(l) Counterparts.
-------------
This Agreement and any amendment hereto may be executed in several
counterparts. All of such counterparts shall constitute one and the same
agreement and shall become effective when a copy signed by each party has been
delivered to the other party.
(m) Interpretation.
---------------
Any rule of law, including but not limited to Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that drafted it
has no application and is expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties.
19
<PAGE>
(n) Antidilution Adjustments.
-------------------------
All amounts of shares, options and option exercise prices referred to
in this Agreement shall be subject to appropriate adjustment for stock splits,
reverse stock splits, stock dividends, restructurings and recapitalizations
occurring after the date hereof.
(o) No Duty to Mitigate.
--------------------
If the Gemstar Closing occurs, all amounts payable pursuant to this
Agreement subsequent to such closing shall be paid without regard to whether
Employee has taken actions to mitigate damages.
(p) Certain Covenants. This Section 8(p) will apply only if the \
Gemstar Closing does not occur. Employee acknowledges that the services to be
furnished by Employee hereunder and the rights and privileges granted to the
Company by Employee are of a special, unique, unusual, extraordinary, and
intellectual character which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and a breach or threatened breach by Employee of any of the provisions contained
in this Section 8(p) may cause the Company irreparable injury and damage. In
order to induce the Company to enter into this Agreement, Employee covenants and
agrees that:
Except as otherwise permitted by Section 2, during (a) the term of
this Agreement, (b) any periods that Employee is employed by the Company or
receiving payments of Base Salary from the Company in the nature of compensation
or severance (except in any instance in which Employee shall accept other
employment under Section 4.1(i)(i)(C) hereof), and (c) a period of one year
following the termination of this Agreement pursuant to Section 4(c) hereof,
Employee will not engage in, perform services for, or have an interest in,
directly or indirectly, any business which competes with business in which the
Company is then engaged (and, in the case of any period following the expiration
of Employee's employment, was engaged at the end of his employment), it being
understood that the business of the Company currently is principally the
business of magazine publishing and interactive and cable businesses primarily
related to television listings and television guidance, and will not directly or
indirectly own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be employed by, or connected in any
manner with any corporation, firm or business that is so engaged. The foregoing
does not prohibit Employee's ownership of less than five percent (5%) of the
outstanding common stock of any company whose shares are publicly traded on a
national stock exchange, are reported on NASDAQ, or are regularly traded in the
over-the-counter market by a member of a national securities exchange.
Employee shall not, during the term of this Agreement or for a period
of eighteen months thereafter, directly or indirectly, induce or attempt to
induce any employee of the Company or its affiliates, to leave the Company or
its affiliates or to render services for any other person, firm or corporation.
20
<PAGE>
Employee acknowledges that the relationship between the parties hereto
is exclusively that of employer and employee, and that the Company's obligations
to him are exclusively contractual in nature. The Company and/or its affiliates
shall be the sole owner or owners of all the fruits and proceeds of Employee's
services hereunder, including, but not limited to, all ideas, concepts, formats,
suggestions, developments, arrangements, designs, packages, programs, scripts,
audio visual materials, promotional materials, photography and other
intellectual properties and creative works which the Employee may prepare,
create, produce, acquire, or otherwise develop in connection with and during his
employment hereunder, including, without limitation, all copyrights and all
rights to reproduce, use, authorize others to use and sell such properties or
works at any time or place for any purpose, free and clear of any claims by
Employee (or anyone claiming under him) of any kind or character whatsoever
(other than Employee's right to compensation hereunder). Employee agrees that he
will have no right in or to such properties or works and shall not use such
properties or works for his own benefit or the benefit of any other person.
Employee shall, at the request of the Company, execute such assignments,
certificates, applications, filings, instruments or other documents, consistent
herewith, as the Company may from time to time reasonably deem necessary or
desirable to evidence, establish, maintain, perfect, protect, enforce or defend
its right, title and interest in or to any such properties or works.
Employee agrees not to criticize Company, its affiliates, officers,
shareholders or employees and agrees further not to speak of Company, its
affiliates, officers, shareholders or employees in an unflattering way. Company
agrees not to criticize Employee and further agrees not to speak of Employee in
an unflattering way.
Employee agrees that during the term of this Agreement and thereafter
he will cooperate in Company's defense against any threatened or pending
litigation or in any investigation or proceeding by any governmental agency or
body that relates to any events or actions which occurred during the term of
this Agreement.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Company"
TV Guide, Inc.
By:
------------------------------------
Name:
Title:
"Employee"
---------------------------------------
Joachim Kiener
22
<PAGE>
SCHEDULE I
ANNUAL INCENTIVE BONUS COMPENSATION
(a) Subject to the terms and conditions of this Agreement, and in addition
to the Base Salary and other Additional Benefits to which Employee may otherwise
be entitled from Employer, at the end of each Compensation Period (or portion
thereof) during the term of this Agreement, Employee shall be deemed to have
earned a bonus (the "Annual Incentive Bonus"), payable by Employer to Employee
on the last day of the Compensation Period (or such sooner date as of which this
Agreement terminates), commencing with the Compensation Period ending December
31, 1999 or, if applicable, the date of the Gemstar Closing. The target amount
of such Annual Incentive Bonus shall be 50% of the Employee's Base Salary in
effect on the last day of the applicable Compensation Period. The actual amount
of the Annual Incentive Bonus payable to the Employee shall be determined based
on criteria determined by mutual agreement of the Employee and prior to the
Gemstar Closing, the Compensation Committee of the Board of Directors and, after
the Gemstar Closing, the Chief Executive Officer of Employer, which criteria
shall be established at least annually and not later than the end of the first
month of the applicable Compensation Period; provided, however, that in no event
shall the amount of the Annual Incentive Bonus for any Compensation Period
commencing prior to the Gemstar Closing be less than $150,000 (the "Guaranteed
Bonus"). Notwithstanding the foregoing, any Annual Incentive Bonus otherwise
payable shall be prorated in the event that a Compensation Period is less than
12 months due to a change in Compensation Period.
(b) The Annual Incentive Bonus amount due for each Compensation Period
shall be paid by Employer to Employee at the end of each Compensation Period (or
such sooner date as of which this Agreement terminates) (the "Due Date").
Employee may, at his own expense, audit the applicable records at the place
where Employer maintains the same in order to verify the calculation of the
Annual Incentive Bonus. Any such audit shall be conducted only by a reputable
public accountant during reasonable business hours in such manner as not to
interfere with Employer's normal business activities. In no event shall an audit
with respect to the calculation of the Annual Incentive Bonus commence later
than twelve (12) months after the Due Date.
If any audit of Employer's records by Employee reveals that Employer
has failed to properly account for and pay Employee the Annual Incentive Bonus
that should have been paid for that Compensation Period, and the amount of any
Annual Incentive Bonus which Employer has failed to properly account and pay for
in respect of any Compensation Period exceeds by at least three percent (3%) the
amount of Annual Incentive Bonus actually accounted for and paid to Employee for
such Compensation Period, Employer shall, in addition to paying Employee such
overdue amount of Annual Incentive Bonus, reimburse Employee for his direct,
reasonable out-of- pocket expenses incurred in conducting such audit.
(c) The provisions of this Schedule I shall not be deemed to restrict in
any way any rights of the Employer or the Board, acting in good faith, during
the term of this
23
<PAGE>
Agreement to dissolve, reorganize or take any other action or make any other
change (fundamental or otherwise) affecting the structure, existence,
organization, operations or business of Employer or any of its subsidiaries. If
at any time during any Compensation Period, Employer shall be dissolved, the
right to Annual Incentive Bonus payments pursuant to this Agreement shall
terminate. If at any time during any Compensation Period, Employer shall be a
party to a merger or sale of all or substantially all of its assets to another
entity, Employer shall (or shall cause a successor to) provide for adjustment as
nearly equivalent as practicable to preserve to Employee the benefits of this
Agreement relating to payment of Annual Incentive Bonus amounts in respect of
the business of Employer or such successor. Such adjustments by the Board made
in good faith shall be conclusive.
(d) All accounting terms or concepts used herein have the meanings assigned
or applied under generally accepted accounting principles, consistently applied.
24
<PAGE>
SCHEDULE II
EXCISE TAX GROSS-UP
(Capitalized terms not defined herein have the meanings ascribed thereto in the
attached Employment Agreement)
(a) In the event it is determined (pursuant to (b) below) or finally
determined (as defined in (c)(iii) below) that any payment, distribution,
transfer, benefit or other event with respect to the Employer or a predecessor,
successor, direct or indirect subsidiary or affiliate of Employer (or any
predecessor, successor of affiliate of any of them, and including any benefit
plan of any of them), to or for the benefit of Employee or Employee's
dependents, heirs or beneficiaries (whether such payment, distribution,
transfer, benefit or other event occurs pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Schedule II) (each a "Payment" and collectively the "Payments") is or
was subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, and any successor provision or any comparable
provision of state or local income tax law (collectively, "Section 4999"), or
any interest, penalty or addition to tax is or was incurred by Employee with
respect to such excise tax (such excise tax, together with any such interest,
penalty, addition to tax, and costs (including professional fees) hereinafter
collectively referred to as the "Excise Tax"), then, within 10 days after such
determination or final determination, as the case may be, Employer shall pay to
Employee an additional cash payment (hereinafter referred to as the "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes,
interest, penalties, additions to tax and costs imposed or incurred with respect
to the Gross-Up Payment (including, without limitation, any income and excise
taxes imposed upon the Gross-Up Payment), Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon such Payment or Payments.
This provision is intended to put Employee in the same position as Employee
would have been had no Excise Tax been imposed upon or incurred as a result of
any Payment.
(b) Except as provided in subsection (c) below, the determination that a
Payment is subject to an Excise Tax shall be made in writing by a certified
public accounting firm selected by Employee ("Employee's Accountant"). Such
determination shall include the amount of the Gross-Up Payment and detailed
computations thereof, including any assumptions used in such computations (the
written determination of the Employee's Accountant, hereinafter, the "Employee's
Determination"). The Employee's Determination shall be reviewed on behalf of
Employer by a certified public accounting firm selected by Employer (the
"Employer's Accountant"). The Employer shall notify Employee within 10 business
days after receipt of the Employee's Determination of any disagreement or
dispute therewith, and failure to so notify within that period shall be
considered an agreement by Employer with the Employee's Determination,
obligating Employer to make payment as provided in subsection (a) above within
10 days from the expiration of such 10 business-day period. In the event of an
objection by Employer to the Employee's Determination, any amount not in dispute
shall be paid within 10 days following the 10 business-day period referred to
herein, and with respect to the amount in
25
<PAGE>
dispute the Employee's Accountant and Employer's Accountant shall jointly select
a third nationally recognized certified public accounting firm to resolve the
dispute and the decision of such third firm shall be final, binding and
conclusive upon the Employee and Employer. In such a case, the third accounting
firm's findings shall be deemed the binding determination with respect to the
amount in dispute, obligating Employer to make any payment as a result thereof
within 10 days following the receipt of such third accounting firm's
determination. All fees and expenses of each of the accounting firms referred to
in this Schedule II shall be borne
solely by Employer.
(c) (i) Employee shall notify Employer in writing of any claim by the
Internal Revenue Service (or any successor thereof) or any state or local taxing
authority (individually or collectively, the "Taxing Authority") that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 30 days
after Employee receives written notice of such claim and shall apprise Employer
of the nature of such claim and the date on which such claim is requested to be
paid; provided, however, that failure by Employee to give such notice within
such 30-day period shall not result in a waiver or forfeiture of any of
Employee's rights under this Schedule II except to the extent of actual damages
suffered by Employer as a result of such failure. Employee shall not pay such
claim prior to the expiration of the 15-day period following the date on which
Employee gives such notice to Employer (or such shorter period ending on the
date that any payment of taxes, interest, penalties or additions to tax with
respect to such claim is due). If Employer notifies Employee in writing prior to
the expiration of such 15-day period that it desires to contest such claim (and
demonstrates to the reasonable satisfaction of Employee its ability to make the
payments to Employee which may ultimately be required under this section before
assuming responsibility for the claim), Employee shall:
(A) give Employer any information reasonably requested by Employer
relating to such claim;
(B) take such action in connection with contesting such claim as
Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by Employer
that is reasonably acceptable to Employee;
(C) cooperate with Employer in good faith in order effectively to
contest such claim; and
(D) permit Employer to participate in any proceedings relating to
such claim; provided, however, that Employer shall bear and pay
directly all attorneys fees, costs and expenses (including
additional interest, penalties and additions to tax) incurred in
connection with such contest and shall indemnify and hold
Employee harmless, on an after-tax basis, for all taxes
(including, without limitation, income and excise taxes),
interest, penalties and additions to tax imposed in relation to
such claim and in relation to the payment of such costs and
expenses or indemnification. Without limitation on the foregoing
provisions of this Schedule II, and to the extent its
26
<PAGE>
actions do not unreasonably interfere with or prejudice
Employee's disputes with the Taxing Authority as to other issues,
Employer shall control all proceedings taken in connection with
such contest and, in its reasonable discretion, may pursue or
forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct Employee to pay
the tax, interest or penalties claimed and sue for a refund or
contest the claim in any permissible manner, and Employee agrees
to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as Employer shall determine;
provided, however, that if Employer directs Employee to pay such
claim and sue for a refund, Employer shall advance an amount
equal to such payment to Employee, on an interest-free basis, and
shall indemnify and hold Employee harmless, on an after-tax
basis, from all taxes (including, without limitation, income and
excise taxes), interest, penalties and additions to tax imposed
with respect to such advance or with respect to any imputed
income with respect to such advance, as any such amounts are
incurred; and, further, provided, that any extension of the
statute of limitations relating to payment of taxes, interest,
penalties or additions to tax for the taxable year of Employee
with respect to which such contested amount is claimed to be due
is limited solely to such contested amount; and, provided,
further, that any settlement of any claim shall be reasonably
acceptable to Employee and Employer's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder, and Employee shall be
entitled to settle or contest, as the case may be, any other
issue.
(ii) If, after receipt by Employee of an amount advanced by Employer
pursuant to paragraph (c)(i), Employee receives any refund with respect to such
claim, Employee shall (subject to Employer's complying with the requirements of
this Schedule II) promptly pay to Employer an amount equal to such refund
(together with any interest paid or credited thereon after taxes applicable
thereto), net of any taxes (including without limitation any income or excise
taxes), interest, penalties or additions to tax and any other costs incurred by
Employee in connection with such advance, after giving effect to such repayment.
If, after the receipt by Employee of an amount advanced by Employer pursuant to
paragraph (c)(i), it is finally determined that Employee is not entitled to any
refund with respect to such claim, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall be treated as
a Gross-Up Payment and shall offset, to the extent thereof, the amount of any
Gross-Up Payment otherwise required to be paid.
(iii) For purposes of this Schedule II, whether the Excise Tax is
applicable to a Payment shall be deemed to be "finally determined" upon the
earliest of: (A) the expiration of the 15-day period referred to in paragraph
(c)(i) above if Employer has not notified Employee that it intends to contest
the underlying claim, (B) the expiration of any period following which no right
of appeal exists, (C) the date upon which a closing agreement or similar
agreement with respect to the claim is executed by Employee and
27
<PAGE>
the Taxing Authority (which agreement may be executed only in compliance with
this Schedule II), (D) the receipt by Employee of notice from Employer that it
no longer seeks to pursue a contest (which notice shall be deemed received if
Employer does not, within 15 days following receipt of a written inquiry from
Employee, affirmatively indicate in writing to Employee that Employer intends to
continue to pursue such contest). (d) As a result of uncertainty in the
application of Section 4999 that may exist at the time of any determination that
a Gross-Up Payment is due, it may be possible that in making the calculations
required to be made hereunder, the parties or their accountants shall determine
that a Gross-Up Payment need not be made (or shall make no determination with
respect to a Gross-Up Payment) that properly should be made ("Underpayment"), or
that a Gross-Up Payment not properly needed to be made should be made
("Overpayment"). The determination of any Underpayment shall be made using the
procedures set forth in paragraph (b) above and shall be paid to Employee as an
additional Gross-Up Payment. The Employer shall be entitled to use procedures
similar to those available to Employee in paragraph (b) to determine the amount
of any Overpayment (provided that Employer shall bear all costs of the
accountants as provided paragraph (b)). In the event of a determination that an
Overpayment was made, any such Overpayment shall be treated for all purposes as
a loan to Employee with interest at the applicable Federal rate provided for in
Section 1274(d) of the Code; provided, however, that the amount to be repaid by
Employee to Employer shall be subject to reduction to the extent necessary to
put Employee in the same after-tax position as if such Overpayment were never
made.
28
<PAGE>
EXHIBIT 99.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of March 1, 1999,
by and between TV Guide, Inc., a Delaware corporation ("Company"), and Peter C.
Boylan III ("Employee").
W I T N E S S E T H:
WHEREAS, Employee currently serves Company as President and Chief Operating
Officer and Member of the Board of Directors; and
WHEREAS, Company desires to obtain the benefit of continued service by Employee
to Company, and Employee desires to render services to Company; and
WHEREAS, the Board of Directors of Company (the "Board") have determined that
because of Employee's substantial experience and expertise in connection with
the business matters of Company, it is in the best interest of Company to retain
the services of Employee and to provide Employee certain additional benefits;
and
WHEREAS, Company and Employee desire to set forth in this Agreement the terms
and conditions of Employee's future employment with Company; and
WHEREAS, Company and Gemstar International Group Limited, a British Virgin
Islands corporation ("GIGL"), have entered into an Agreement and Plan of Merger,
dated as of October 4, 1999 (the "Merger Agreement") providing for a transaction
in which, upon closing of such transaction (the "Gemstar Closing"), GIGL will
become a Delaware corporation, the Company will become a subsidiary of GIGL, and
GIGL as parent of the combined companies will change its name to TV Guide
International, Inc. ("TV Guide International"); and
WHEREAS, effective upon the Gemstar Closing, TV Guide International will assume
the obligations of the Company hereunder.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties agree as follows:
1. Term and Renewals; Shareholder Approval.
----------------------------------------
(a) Initial Term.
-------------
Company agrees to employ Employee and Employee agrees to serve
Company, in accordance with the terms of this Agreement, for an initial term
commencing with an effective date of March 1, 1999 and ending March 1, 2003 (the
"Initial Term"), unless this Agreement is earlier terminated in accordance with
the provisions which follow. Notwithstanding the foregoing, on the effective
date of the
1
<PAGE>
Gemstar Closing, the Initial Term shall be extended to the sixth anniversary of
the Gemstar Closing. The term "Employer" as used herein shall refer to the
Company, unless and until the Gemstar Closing occurs, and thereafter shall refer
to TV Guide International.
(b) Renewal.
--------
This Section 1(b) will apply only if the Gemstar Closing occurs
prior to the expiration of the Initial Term. Upon expiration of the Initial
Term, this Agreement shall be automatically renewed for a term of three
additional years (the "Renewal Term"), unless either party gives notice, in
writing, at least twelve (12) months prior to the expiration of the Initial Term
of its desire to terminate this Agreement.
If Employer delivers to Employee the written termination notice
contemplated by this Section 1(b), or if the Initial Term expires without
Employer and Employee having reached an agreement for the continued employment
of Employee by Employer that is satisfactory to Employer and Employee (in their
sole and absolute discretion), such termination or expiration shall be treated
as a termination Without Cause pursuant to Section 4(d) of this Agreement, and
the date of such termination or expiration shall be deemed the date of notice of
termination for purposes of Section 4(d).
(c) Compensation Period; Current Term.
----------------------------------
Each annual period (or portion thereof) during the term of this
Agreement and during any period following termination of Employee's employment
hereunder during which Employer has ongoing obligations hereunder shall be a
distinct and separate compensation period ("Compensation Period"). The
Compensation Period shall be the calendar year, provided, however, that if the
Gemstar Closing occurs, the Compensation Period shall thereafter be the fiscal
year of TV Guide International and any compensation measured with respect to a
Compensation Period hereunder shall be adjusted as appropriate to reflect the
change in the Compensation Period. The then-current term of this Agreement,
whether it is the Initial Term (together with, if the Gemstar Closing occurs,
the Renewal Term if the termination deadline under Section 1(b) has passed
without delivery of the termination notice contemplated thereunder) or the
Renewal Term, shall be known as the "Current Term."
2. Specific Position; Duties and Responsibilities.
-----------------------------------------------
Employer and Employee agree that, subject to the provisions of this
Agreement, Employer will employ Employee and Employee will serve Employer as
President and Chief Operating Officer, provided, however, that if the Gemstar
Closing occurs, such employment and service shall thereafter be as Co-President
and Co-Chief Operating Officer of TV Guide International, member of the Office
of the Chief Executive of TV Guide International, and Chairman and Chief
Executive Officer of certain TV Guide business divisions which shall include but
not be limited to United Video Group, TV Guide Interactive Group, TV Guide On-
Line, TV Guide Interactive and Television
2
<PAGE>
Games Network. Employee shall have such other additional duties and
responsibilities befitting the foregoing positions as the Board shall determine
from time to time.
Employee agrees to devote substantially all of his time, energy and
ability to the business of Employer. Nothing herein shall prevent Employee,
upon approval of the Board, from serving as a director, consultant or trustee of
other corporations or businesses that are not in competition with the business
of Employer or in competition with any affiliate of Employer. Such approval of
the Board shall not be unreasonably withheld. If the Gemstar Closing occurs,
nothing herein shall prevent Employee from (i) investing in real estate for his
own account, (ii) becoming a partner or a shareholder in any privately-held
corporation, partnership or other venture not in competition with the business
of Employer or any affiliate of Employer or (iii) becoming a partner or a
shareholder with an equity interest of not more than ten percent (10%) in any
corporation, partnership or other venture whose equity securities are publicly
traded, whether or not such corporation, partnership or other venture is in
competition with the business of Employer or any affiliate of Employer. Nothing
in this Agreement shall restrict the Board from paying and granting to Employee
additional cash compensation and/or grants of stock or stock options from
entities created as joint ventures between Employer (or any of its affiliates)
and third parties as a means of providing further incentives for Employee.
For the term of this Agreement, Employee shall report to the Chief
Executive Officer of the Employer and to the Board of Directors of Employer;
provided, however, that if the Gemstar Closing occurs, Employee thereafter shall
report to the Chief Executive Officer of TV Guide International.
3. Compensation.
-------------
(a) Base Compensation and Adjustments.
----------------------------------
During the term of this Agreement, Employer agrees to pay Employee
a base salary at the rate of Seven Hundred Fifty Thousand Dollars
(US$750,000.00) per year. Base salary shall be reviewed from time to time for
increase in Employer's sole discretion (provided such increases shall be made at
least annually, each such increase to be in an amount not less than any
percentage increase in the Consumer Price Index). Such base salary in effect
from time to time, including any increases, shall be referred to herein as "Base
Salary."
The base salary shall be earned monthly and shall be payable in
periodic installments no less frequently than monthly in accordance with
Employer's customary practices. Amounts payable shall be reduced by standard
withholding and other authorized deductions.
(b) Annual Incentive Bonus.
-----------------------
Employer shall pay to Employee in respect of each Compensation
Period (or portion thereof) during the term of this Agreement, the incentive
bonus compensation benefits described in, and in accordance with the terms of,
Schedule I to this Agreement
3
<PAGE>
(the "Annual Incentive Bonus"), which is incorporated herein by reference as
though set forth herein in full.
(c) Stock Options.
--------------
(i) Company has previously granted to Employee options to
acquire three hundred thousand (300,000) shares of
Class A common stock of TV Guide, Inc. at an exercise
price of $25 per share (the "First 1999 Option
Grant"). Notwithstanding the otherwise applicable
exercise schedule under the First 1999 Option Grant,
if the Gemstar Closing occurs, (i) upon the date of
such closing, options to acquire two-thirds of the
total number of shares under the First 1999 Option
Grant shall vest and become exercisable immediately
and (ii) subject to other accelerated vesting
provisions of the First 1999 Option Grant agreement,
options to acquire the remaining one-third of the
total number of shares under the First 1999 Option
Grant shall vest and become exercisable ratably (i.e.,
options on one-fifth of such remaining one-third of
the total shares each year) on each March 1 of the
years 2000 through 2004.
(ii) Effective October 1, 1999, Company has granted to
Employee options to acquire 760,688 shares of Class A
common stock of TV Guide, Inc. (the "Second 1999
Option Grant"). Options under the Second 1999 Option
Grant shall first vest and become fully exercisable
one day prior to the tenth anniversary of the date of
grant provided that (notwithstanding anything to the
contrary in Section 4 hereof) Employee is then
employed by the Company; provided, however, that if
the Gemstar Closing occurs, options under the Second
1999 Option Grant shall vest and become exercisable
ratably (i.e., options on one-sixth of the shares) on
each of the first through the sixth anniversaries of
the Gemstar Closing, subject to the accelerated
vesting provisions set forth in the Second 1999 Option
Grant agreement. The exercise price per share under
the Second 1999 Option Grant shall be $43.86. Each of
the options issued under the Second 1999 Option Grant
shall expire on the tenth anniversary of the date of
grant.
(iii) The options under the First 1999 Option Grant and the
Second 1999 Option Grant, as well as the stock options
granted by Company to Employee prior to 1999, shall
convert to options for the purchase of shares of
common stock of TV Guide International upon the
occurrence of the Gemstar Closing. The number of
shares issuable upon
4
<PAGE>
exercise of such options and the exercise price
thereof shall be adjusted as provided in the Merger
Agreement. By way of example, immediately following
the Gemstar Closing, 500,000 shares of TV Guide
International common stock shall be subject to
purchase at an exercise price of $66.73 under the
Second 1999 Option Grant.
(d) Additional Benefits.
--------------------
Employee shall also be entitled to all rights and benefits for
which Employee is otherwise eligible under any bonus, incentive, participation,
stock option or extra compensation plan, pension plan, profit-sharing plan,
life, medical, dental, disability, or insurance plan or policy or other plan or
benefit that Employer, its subsidiaries or affiliates may provide for Employee
or (provided Employee is eligible to participate therein) for employees of
Employer generally, as from time to time in effect, during the term of this
Agreement. In order to maximize Employee's time availability to Employer, if the
Gemstar Closing occurs, Employer shall also promptly reimburse Employee for the
Grossed-Up Value (as defined below) of all professional fees and expenses
incurred by Employee in connection with (A) the negotiation and documentation of
this Agreement and any amendment thereto, (B) income tax planning and
preparation, and (C) income tax audits and the defense of income tax claims. All
of the benefits described in this Section 3(d) are collectively referred to
herein as the "Additional Benefits." The Additional Benefits shall be provided
at the level commensurate with the office held by Employee at the time and shall
recognize for vesting and eligibility purposes (but not for purposes of
calculating Employee's age or for benefit accrual purposes) Employee's prior
service with Employer to the extent (if any) that such prior service is
recognized under any such plans.
As used in this Agreement, the "Grossed-Up Value" of an amount shall
equal the result obtained by dividing (A) such amount by (B) the difference of
one (1) minus the sum of the highest marginal federal and state personal income
tax rates, the highest Medicare tax rate (expressed as a decimal), the
additional effective income tax rate (expressed as a decimal) resulting from the
receipt of such amount reducing available deductions of Employee, and any other
income, payroll or similar rate of tax (expressed as a decimal) imposed on the
receipt by Employee of such amount.
(e) Vacation.
---------
In each Compensation Period, Employee shall be entitled to an
amount of paid vacation equal to four (4) weeks plus, if the Gemstar Closing
occurs, an additional three (3) days for each Compensation Period (or portion
thereof) previously completed during the term of this Agreement. If the Gemstar
Closing occurs, up to sixty (60) unused vacation days may be carried over from
any Compensation Period to the ensuing Compensation Period, and Employee shall
be paid in cash, on the last day of each Compensation Period, for any unused
vacation days that cannot be carried over to the ensuing Compensation Period at
a rate per day equal to the quotient of Employee's Base
5
<PAGE>
Salary for the just-completed Compensation Period divided by two hundred twenty
(220) (the number of working days in the year).
(f) Professional Organizations and Education.
-----------------------------------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall promptly reimburse
Employee for the Grossed-Up Value of (A) the professional and membership fees
and dues incurred by Employee to maintain a membership in, or to belong to, such
professional organizations and societies as may be designated by Employee from
time to time and one (1) social or country club; and (B) the fees and costs
incurred by Employee in attending professional education courses selected by
Employee.
(g) Automobile Allowance.
---------------------
Employer shall provide Employee with a car allowance of (x) prior
to the Gemstar Closing, twelve hundred dollars (US$1,200.00) per month and (y)
after the Gemstar Closing, seven hundred and fifty dollars (US$750.00) per
month, to be used for the purchase, lease and maintenance of an appropriate
automobile for his use during the term of Employee's employment hereunder. If
Employer leases or purchases an automobile for Employee's use, Employee shall
have the ability to assume the lease at the end of the term thereof or purchase
the automobile at its residual or depreciated value upon termination of his
employment.
(h) Disability Insurance.
---------------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall purchase and keep in
effect, or reimburse Employee for the cost of, one or more policies of
disability insurance reasonably satisfactory to Employee and Employer, providing
benefits substantially equal to those benefits described in Section 3(h) of that
certain Amended and Restated Employment Agreement among Ms. Elsie Leung, GIGL
and Gemstar Development Corporation dated March 31, 1998. Such purchase or
reimbursement shall include payment to Employee of such amount as is necessary
to ensure that Employee receives the Grossed-Up Value of the premiums on such
disability policy (less any amounts paid directly by Employer to the carrier).
Such policy will contain a feature permitting Employee to continue the policy at
his cost (subject to other provisions in this Agreement requiring Employer to
fund such amounts following termination of employment) following any termination
of Employee's employment.
(i) Life Insurance.
---------------
If the Gemstar Closing occurs, from and after such closing, during
the Initial Term and any Renewal Term, Employer shall purchase and keep in
effect, or reimburse Employee for the cost of, a policy of life insurance
reasonably satisfactory to Employee and Employer, providing benefits
substantially equal to those benefits described in Section 3(i) of that certain
Amended and Restated Employment Agreement among Ms. Elsie Leung, GIGL and
Gemstar Development Corporation dated March 31,
6
<PAGE>
1998. Such purchase or reimbursement shall include payment to Employee of such
amount as is necessary to ensure that Employee receives the Grossed-Up Value of
the premiums on such life insurance policy (less any amounts paid directly by
Employer to the carrier). Such policy will contain a feature permitting Employee
to continue the policy at his cost (subject to other provisions in this
Agreement requiring Employer to fund such amounts following termination of
employment) following any termination of Employee's employment.
(j) Other Benefits.
---------------
Employee will, from time to time, receive such other benefits as he
may reasonably request that are commensurate with Employee's position and
facilitate performance of his duties under this Agreement.
4. Termination.
------------
The compensation and other benefits provided to Employee pursuant to
this Agreement, and the employment of Employee by Employer, shall be terminated
prior to expiration of the term of this Agreement only as provided in this
Section 4:
(a) Disability.
-----------
In the event of Employee's Disability, Employee's employment
hereunder may be terminated by written notice of termination from Employer to
Employee. "Disability" for this purpose means Employee's failure, because of
illness, incapacity or injury which is determined to be total and permanent by a
physician selected by Employer or its insurers and acceptable to Employee or
Employee's legal representative (such agreement as to acceptability not to be
withheld unreasonably), to render the services contemplated by this Agreement,
(x) if the Gemstar Closing does not occur, for an aggregate of 180 days during
any 365-day period or (y) if the Gemstar Closing occurs, for three consecutive
months or for shorter periods aggregating seventy-five (75) or more business
days in any twelve (12) month period. Thereafter, Employer shall pay Employee
all of his previously earned Base Salary and Additional Benefits and (x) if the
Gemstar Closing occurs, shall continue for twenty-four (24) months after the
date of such notice or until expiration of the Current Term, whichever period is
longer, to pay Base Salary to Employee at a rate and time and in an amount and
manner equal to one hundred percent (100%) of the Base Salary payable
immediately prior to the termination and (y) if the Gemstar Closing does not
occur, shall continue for twelve (12) months after termination of employment to
pay to Employee Base Salary at a rate and time and in an amount and manner equal
to one hundred percent (100%) of the Base Salary payable immediately prior to
termination less any proceeds Employee receives from disability insurance
provided by the Company. Thereafter, no further salary shall be paid except to
the extent otherwise expressly provided in Section 4(b). Upon any such
employment termination pursuant to this Section 4(a), (i) all previously vested
stock options and other stock incentive awards shall remain fully exercisable
for their full term, (ii) if the Gemstar Closing occurs, all stock option and
other stock incentive awards granted to Employee which would become vested and
exercisable for the then current
7
<PAGE>
Compensation Period and the next Compensation Period (and which would not
otherwise become vested and exercisable) shall immediately vest in full and
shall remain fully exercisable for their full term, and (iii) any remaining
stock options and other stock incentive awards that have not otherwise become
vested or exercisable shall be forfeited.
(b) Death.
------
In the event of Employee's death during the term or during the
extended benefit period contemplated by Section 4(a), Employer shall pay to such
person or persons as Employee shall have directed in writing or, in the absence
of a designation, the estate of Employee (the "Beneficiary") all of Employee's
previously earned Base Salary and Additional Benefits and (x) if the Gemstar
Closing occurs, shall continue for twenty-four (24) months after the date of
Employee's death or until expiration of the Current Term, whichever period is
longer, to pay Employee's Base Salary to the Beneficiary at a rate and time and
in an amount and manner equal to one hundred percent (100%) of the Base Salary
payable immediately prior to death and (y) if the Gemstar Closing does not
occur, shall continue for twelve (12) months after the date of Employee's death
to pay Employee's Base Salary to the Beneficiary at a rate and time and in an
amount and manner equal to one hundred percent (100%) of the Base Salary payable
immediately prior to death (provided that the Company may provide this benefit
through the proceeds of individual or group insurance coverage). If Employee's
death occurs while receiving payments under Section 4(a) above, such payments
shall cease and the Beneficiary shall be entitled only to payments and benefits
under this Section 4(b) at one hundred percent (100%) of the rate of Base Salary
in effect immediately prior to the disability. If the Gemstar Closing does not
occur, then upon Employee's death, all stock options and other stock incentive
awards that shall have vested as of the date of Employee's death shall remain
exercisable for a period of one year following such date (but in no event for
longer than their term). If the Gemstar Closing occurs, then upon Employee's
death all previously vested stock options and other stock incentive awards shall
remain fully exercisable for their full term, any stock options and other stock
incentive awards that would have vested on a date within one year following
Employee's death (assuming Employee had satisfied the other vesting conditions
of such options and awards) shall vest as to that percentage equal to the
percentage of the then applicable one-year vesting period completed prior to
Employee's death, and any remaining options that did not otherwise become vested
or exercisable shall be forfeited. (By way of example, with respect to an
option that was scheduled to vest six months following the date of Employee's
death, 50% of such option will become vested as a result of the preceding
sentence.) This Agreement in all other respects will terminate upon the death
of Employee except as otherwise expressly provided.
(c) For Cause, Right to Appeal.
---------------------------
Employee's employment hereunder shall be terminated, and all of
his unearned rights to receive Base Salary and (subject to the terms of any
plans relating thereto) Additional Benefits hereunder in respect of any period
after such termination shall immediately terminate upon a reasonable
determination by the Board, acting in good faith based upon actual knowledge at
such time and, if applicable, following the
8
<PAGE>
notice and cure period or notice and meeting described in the immediately
succeeding paragraph, that Cause for such termination exists. Prior to the
Gemstar Closing, "Cause" means the willful and continued failure to perform
Employee's job duties; or conviction of, or pleading guilty or nolo contendere
to, a felony; or willfully engaging in misconduct, the nature of which is not
prohibited from being the basis of termination under applicable federal or state
law and which is either injurious monetarily to Employer, or represents a breach
of any material affirmative or negative covenant or undertaking hereunder.
Following the Gemstar Closing, "Cause" means that Employee (i) is engaging or
has engaged in acts of fraud, material dishonesty or other acts of willful
misconduct that have had a material adverse effect on the business of Employer,
(ii) has repeatedly and willfully refused to perform his significant duties
hereunder after notice, (iii) has habitually abused any substance (such as
narcotics or alcohol) and such abuse has had a material adverse effect on the
business of Employer or (iv) has been convicted of, or plead guilty to, an act
constituting a felony that has had a material adverse effect on the business of
Employer.
Notwithstanding the foregoing, Employee's employment hereunder shall
not be terminated for Cause pursuant to this Section 4(c) at any time (x) prior
to the Gemstar Closing, unless and until Employee has been previously notified
of such Cause in writing and been given no less than 30 days to cure such Cause,
except that no such notice and opportunity to cure will be required in the case
of Employee's conviction of or pleading guilty or nolo contendere to a felony,
or (y) following the Gemstar Closing, unless and until Employee has received
notice of a proposed termination for Cause and Employee has had an opportunity
to be heard before at least a majority of the members of the Board. Employee
shall be deemed to have had such opportunity if given written notice by any
director acting on behalf of the Board at least seventy-two (72) hours in
advance of a meeting if scheduled in California or ninety-six (96) hours in
advance if such meeting is scheduled outside California. Any actions or
proceedings by Employer pursuant to this Section 4(c) shall be conducted in a
confidential manner and all steps shall be taken to prevent any harm to
Employee's reputation.
Upon any such employment termination pursuant to this Section 4(c),
all stock options and other stock incentive awards previously granted to
Employee and then remaining unvested and, if the Gemstar Closing has not
occurred, all previously vested stock options and other stock incentive awards
not theretofore exercised shall be forfeited, and if the Gemstar Closing has
occurred, all previously vested stock options and other stock incentive awards
shall remain fully exercisable for their full term.
(d) Without Cause.
--------------
Notwithstanding any other provision of this Section 4, excluding the
provisions of Section 4(e), the Board shall have the right to terminate
Employee's employment with Employer at any time, but in the event of any such
termination, other than as expressly provided in Section 4(a), (b) or (c)
herein, or in the event following the Gemstar Closing Employer elects not to
renew the term of this Agreement by giving notice of termination under Section
1(b) hereof (any such termination of Employee's employment under this Section
4(d) being referred to in this Agreement as a termination
9
<PAGE>
"Without Cause"), Employer shall thereafter pay and grant to Employee, in
addition to any other amounts due under this Agreement, the compensation
described in the applicable paragraph below:
(i) If the Gemstar Closing has not occurred prior to the date
of the termination Without Cause, Employee shall be
entitled to the same compensation the Employee would be
entitled to receive pursuant to Section 4(i)(i) if the
Employee quit as provided for thereunder following a
Change of Control.
(ii) If the termination Without Cause occurs following the
Gemstar Closing, on the last day of Employee's employment,
Employee shall be entitled to an amount equal to the
greater of (a) the product of Employee's then-current Base
Salary multiplied by a factor of three (3), and (b) the
product of Employee's then- current Base Salary multiplied
by the number of years, rounded up, remaining in the
Current Term, and Employer shall thereafter continue to
provide to Employee the Additional Benefits for sixty (60)
months from such last day of employment. Upon any such
employment termination pursuant to this Section 4(d), all
stock options and other stock incentive awards previously
granted to Employee shall immediately vest in full and
shall become fully exercisable for their full term, and
all previously vested stock options and other stock
incentive awards shall remain fully exercisable for their
full term.
If the Gemstar Closing does not occur and the Company determines
not to renew this Agreement or fails to negotiate a renewal in good faith, all
stock options and stock incentive awards previously granted to Employee shall be
fully vested upon the expiration of the Initial Term.
(e) Required Consents.
------------------
Notwithstanding any other provision of this Agreement, if the
Gemstar Closing occurs, Employee's employment may not be terminated thereafter
without the consent of Employee unless the members of Employer's Board of
Directors designated by Liberty Media Corporation or its successor (by merger,
consolidation, transfer of assets or otherwise), if any, but excluding the
Employee himself and any TVG Independent Director (as such term is defined in
the Bylaws for TV Guide International in the form annexed to the Merger
Agreement), provide written consent to such termination.
10
<PAGE>
(f) Limited Succession of Additional Benefits Upon Termination.
-----------------------------------------------------------
If the Gemstar Closing occurs and thereafter Employee's services
are terminated hereunder pursuant to Section 4(a) or 4(b) and Employee is no
longer eligible for Additional Benefits (under the terms of any plans relating
thereto) because of such termination, Employee (or in event of death, the
Beneficiary) shall be entitled to and Employer shall provide the Grossed-Up
Value of benefits substantially equivalent to those benefits in the nature of
health and welfare type benefits to which Employee was entitled immediately
prior to such termination for the period (if any) during which Employee (or
Beneficiary, as the case may be) remains entitled to receive the Base Salary
under such sections. During such period, however, Employee shall not be entitled
to option, equity, appreciation, profit sharing, deferred compensation, savings,
bonus, participation, pension, extra compensation and other incentive plan
benefits (except to the extent otherwise expressly provided in any then
outstanding awards to Employee).
(g) Constructive Termination.
-------------------------
A Constructive Termination (defined below) shall be treated as a
termination Without Cause pursuant to Section 4(d) of this Agreement.
For purposes of this Agreement, "Constructive Termination" means
the occurrence of any of the following without Employee's written consent:
change of Employee's position, so that Employee does not hold the applicable
positions indicated under Section 2, failure of Employee to be elected as a
member of the Board of Directors, assignment to Employee of duties or
responsibilities inconsistent with such applicable positions, relocation of
Employee's principal office to a geographic location outside of Tulsa, Oklahoma,
the requirement that Employee report to any person or entity other than the
Chief Executive Officer of the Employer, or the diminishment or reduction of any
material responsibilities assigned to the Employee at any time, in each case
other than as a result of grounds for termination of employment for Cause under
Section 4(c), for disability under Section 4(a) or because of death or
retirement.
(h) Termination by Employee.
------------------------
Subject to this Section 4(h), Employee shall have the right, in his
sole discretion, to terminate his employment under this Agreement at any time
after expiration of the period ending eighteen (18) months after the date of the
Gemstar Closing, by providing notice, in writing, at least six (6) months prior
to Employee's termination of employment, but in the event of any such
termination following the Gemstar Closing, Employer shall thereafter pay and
grant to Employee, in addition to any other amounts due under this Agreement, on
the last day of Employee's employment, an amount equal to the Employee's then-
current Base Salary. Upon termination by Employee, all stock options and other
stock incentive awards previously granted to Employee and then remaining
unvested shall be forfeited, and all previously vested stock options and other
stock incentive awards shall, if the Gemstar Closing has occurred, remain fully
exercisable for their full term and, if the Gemstar Closing has not occurred,
shall remain
11
<PAGE>
exercisable for a period of three months following such termination (but in no
event for longer than their term).
(i) Change of Control.
------------------
(i) A Change of Control of the Company for the purposes
of this Section 4(i)(i) shall mean the closing of a
transaction which has the result that none of (x) The
News Corporation Limited, together with its
subsidiaries and affiliates ("TNCL"), (y) Liberty
Media Corporation, together with its subsidiaries and
affiliates ("Liberty"), or (z) TNCL and Liberty
collectively, owns a majority of the outstanding
shares of voting capital stock of the Company or of
its successor. Notwithstanding the foregoing
provisions of this Section 4(i)(i), no Change of
Control shall be deemed to have occurred under this
Agreement by reason of the Gemstar Closing or any
aspect of the transactions contemplated by the Merger
Agreement. Within a six-month period after the
occurrence of a Change of Control of the Company,
Employee shall be entitled to consider his employment
to have been constructively terminated by the Company
and to, therefore, quit and receive the compensation
set forth below:
(A) Employee shall be entitled to Employee's Base Salary
at the rate in effect at the date of termination
through the end of the Current Term, which shall
continue to be paid in accordance with the Company's
payroll policies.
(B) Employee shall be entitled to continue, without
charge, his participation in the Company's insurance
plans including, but not limited to, individual
supplementary health, disability, life and other
similar insurance to the extent such benefits exist,
until the end of the Current Term, provided, however
that such participation shall terminate at such time
as Employee is eligible to receive substantially
equivalent insurance benefits through subsequent
employment.
(C) Employee shall be entitled to exercise any and all
stock options and other stock incentive awards which
shall have vested as of the date of the Employee's
termination and all unvested stock options and other
stock incentive awards previously granted which shall
immediately vest as of the date of Employee's
termination, for the earlier of ten years from date
of grant or five years following the termination of
employment.
12
<PAGE>
The Employee agrees to accept the compensation
provided in this Section 4(i)(i) as liquidated
damages in lieu of any other damages or severance
benefits to which he might be entitled as a result of
the termination of his employment with the Company.
Notwithstanding anything to the contrary contained
herein, if Employee accepts other employment after
termination of employment under this Section 4(i)(i),
whether such employment is full-time, part-time or as
an independent contractor or consultant, the total
compensation earned in connection with such other
employment, whether paid to Employee or deferred for
his benefit, for services rendered on or prior to the
end of the Current Term shall be set-off against the
amounts otherwise payable to the Employee pursuant to
this Section 4(i)(i). Promptly upon the request of
the Company, Employee shall provide evidence
satisfactory to the Company of all such other
compensation earned.
(ii) If the Gemstar Closing occurs, the provisions of
Section 4(i)(i) shall cease to apply and shall be
superseded entirely by this Section 4(i)(ii) upon the
date of such closing. From and after the Gemstar
Closing, as used in this Agreement, "Change of
Control" is defined as any of the following acts:
(A) The acquisition (other than from Employer directly or
from any stockholder of Employer who immediately
following the Gemstar Closing owns twenty-five
percent (25%) or more of Employer's outstanding
common stock) after the Gemstar Closing by any
person, entity, or group, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of
beneficial ownership of twenty-five percent (25%) or
more of Employer's outstanding common stock, other
than any such acquisition by TNCL, by Liberty or by
TNCL and Liberty collectively; provided that such
acquisition shall not constitute a Change of Control
if, after giving effect thereto, TNCL and Liberty
collectively own a greater percentage of Employer's
outstanding common stock than the acquiring person,
entity or group; or
(B) During any period of two (2) consecutive years
following the Gemstar Closing, individuals who, at
the beginning of such period, constituted the board
of directors of Employer (together with any new
directors whose election or appointment to such board
of directors or whose nomination for election by the
stockholders of Employer
13
<PAGE>
was approved by Employee or by a vote of a majority of the
directors then still in office who were either directors at
the beginning of such period or whose election, appointment
or nomination for election was previously so approved or by
a vote of a majority of the directors designated by TNCL and
Liberty) cease for any reason to constitute a majority of
the board of directors of Employer then in office; or
(C) Approval by the board of directors or a majority of the
stockholders of Employer of a merger, reorganization,
combination or consolidation whereby the stockholders of
Employer immediately prior to such approval will not,
immediately after consummation of such reorganization,
merger, combination or consolidation own more than fifty
percent (50%) of the voting stock of the surviving entity;
or
(D) A liquidation or dissolution of Employer or the sale of all
or substantially all of the assets of Employer.
Employee shall have the right, in his sole discretion, to
terminate his employment under this Agreement at any time during
the ninety (90) days following notice of a Change of Control, and
in the event of any such termination Employer shall thereafter
pay and grant to Employee, in addition to any other amounts due
under this Agreement, on the last day of Employee's employment,
an amount equal to the product of Employee's Base Salary
multiplied by five (5), and Employer shall thereafter continue to
provide to Employee all other elements of compensation under
Section 3 for sixty (60) months from such last day of employment,
except that upon such termination, all unvested stock options and
other stock incentive awards previously granted to Employee shall
immediately vest in full and shall become fully exercisable for
their full term, and all previously vested stock options and
other stock incentive awards shall remain fully exercisable for
their full term.
(iii) Employee's Base Salary and other compensation shall be
reviewed promptly following any Change of Control, whether
pursuant to Section 4(i)(i) or Section 4(i)(ii), and
increased (but not decreased) to reflect any expansion of
Employee's duties or areas of responsibility, as determined
in good faith by the Board. In the event a transaction
described in Section 280G(b)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended, occurs with respect to
Employer, any predecessor, successor, direct or indirect
14
<PAGE>
subsidiary or affiliate of Employer, the provisions of
Schedule II shall apply.
5. Business Expenses.
------------------
During the term of this Agreement, Employer shall reimburse Employee
promptly for reasonable business expenditures, whether or not Employer can fully
deduct such expenses according to federal income tax laws.
6. Inventions and Patents.
-----------------------
If the Gemstar Closing occurs, the provisions of this Section 6 shall
thereafter apply. Subject to exceptions under Section 2870 of the California
Labor Code, all inventions, designs, improvements, patents, copyrights, and
discoveries conceived by Employee after the date of the Gemstar Closing and
during the term of this Agreement which are competitive with or related to
existing products or services of Employer or its affiliates or products or
services under active development by Employer or its affiliates, shall be
assigned to Employer. Exhibits A and B attached to the employment agreement
between GIGL and Henry C. Yuen, as the same is to be amended as contemplated by
the Merger Agreement in connection with the Gemstar Closing, contain a
description of Employer's business and the products and services currently under
active development by Employer and its affiliates. Employee will promptly and
fully disclose to Employer all such inventions, designs, improvements, and
discoveries (whether developed individually or with other persons) and shall
take all reasonable steps necessary and required to assure Employer's ownership
thereof and to assist Employer in protecting or defending Employer's proprietary
rights therein. Employee acknowledges hereby receipt of written notice from
Employer pursuant to California Labor Code Section 2872 that this Agreement (to
the extent it requires an assignment or offer to assign rights to any invention
of Employee) does not apply to an invention that qualifies fully under
California Labor Code Section 2870.
7. Indemnity.
----------
To the maximum extent permitted by applicable law, Employer shall indemnify
Employee and hold Employee harmless from and against any and all claims,
liabilities, judgments, fines, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees, costs of investigation and experts,
settlements and other amounts actually incurred by Employee in connection with
the defense of any action, suit or proceeding, and in connection with any appeal
thereon) incurred by Employee in any and all threatened, pending or completed
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (including, without limitation, actions, suits or proceedings
brought by or in the name of Employer), arising, directly or indirectly, by
reason of Employee's status, actions or inaction as a director, officer,
employee or agent of Employer or of an affiliate of Employer so long as
Employee's conduct was in good faith. Employer shall promptly advance to
Employee upon request any and all expenses incurred by Employee in defending any
and all such actions, suits or proceedings to the maximum extent permitted by
applicable law.
15
<PAGE>
8. Miscellaneous.
--------------
(a) Succession; Survival.
---------------------
This Agreement shall inure to the benefit of and shall be binding upon
Employer and its successors and assigns but, without the prior written consent
of Employee, this Agreement may not be assigned other than in connection with a
merger or sale of substantially all the assets of Employer or a similar
transaction in which the successor or assignee assumes (whether by operation of
law or express assumption) all obligations of Employer hereunder, including the
transactions contemplated by the Merger Agreement. The obligations and duties of
Employee hereunder are personal and otherwise not assignable.
(b) Notices.
--------
Any notice or other communication provided for in this Agreement shall
be in writing and sent, if to Company, to:
TV Guide Inc.
7140 S. Lewis Avenue
Tulsa, Oklahoma 74136
ATTENTION: Mr. Charles Butler Ammann,
Senior Vice President and General Counsel
of, if the Gemstar Closing occurs, thereafter to:
TV Guide International, Inc.
135 North Los Robles Avenue,
Suite 800
Pasadena, California 91101
ATTENTION: General Counsel
or at such other address as Employer may from time to time in writing designate,
and, if to Employee, at such address as Employee may from time to time in
writing designate (or Employee's business address of record in the absence of
such designation). Each such notice or other communication shall be effective
(i) if given by telecommunication, when transmitted to the applicable number so
specified in (or pursuant to) this Section 8(b) and an appropriate answer back
is received, (ii) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iii) if given by any other means, when actually delivered at such address.
(c) Entire Agreement; Amendments.
-----------------------------
This Agreement contains the entire agreement of the parties relating
to the subject matter hereof and it supersedes any prior agreements,
undertakings, commitments and practices relating to Employee's employment by
Employer or its affiliates except for
16
<PAGE>
any and all other agreements necessary to give effect to the provisions of this
Agreement, including, without limitation, stock option agreements, and
agreements relating to Additional Benefits. No amendment or modification of the
terms of this Agreement shall be valid unless made in writing and signed by
Employee and, on behalf of Employer, by, if prior to the Gemstar Closing, a
member of either the Executive Committee or the Compensation Committee of the
Board of Directors (but excluding Employee) and, if after the Gemstar Closing,
the Chief Executive Officer of Employer or an authorized representative of the
Board.
(d) Waiver.
-------
No failure on the part of any party to exercise or delay in exercising
any right hereunder shall be deemed a waiver thereof or of any other right, nor
shall any single or partial exercise preclude any further or other exercise of
such right or any other right.
(e) Choice of Law.
--------------
This Agreement, the legal relations between the parties and any
action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement, the relationship of the parties or the subject matter
hereof shall be governed by and construed in accordance with the internal laws
of the State of Delaware applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines (or, if the Gemstar
Closing occurs, the internal laws of the State of California from and after such
closing).
(f) Arbitration.
------------
This Section 8(f) will apply only if the Gemstar Closing occurs. Any
controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration. Such arbitration shall be held in Los Angeles County, California
in accordance with California Code of Civil Procedure Sections 1282-1284.2 if
the arbitration occurs at a time when this Agreement is subject to the laws of
the State of California pursuant to Section 8(e) above. In the event either
party institutes arbitration under this Agreement, the party prevailing in any
such arbitration shall be entitled, in addition to all other relief, to
reasonable attorneys' fees relating to such arbitration. The nonprevailing party
shall be responsible for all costs of the arbitration, including but not limited
to, the arbitration fees, court reporter fees, etc.
(g) Confidentiality, Proprietary Information.
-----------------------------------------
Employee agrees to not make use of, divulge or otherwise disclose,
directly or indirectly, any trade secret or other confidential or proprietary
information concerning the business (including, but not limited to its products,
employees, services, practices or policies) of Employer or any of its affiliates
of which Employee may learn or
17
<PAGE>
be aware as a result of Employee's employment during the term of this Agreement
or prior thereto as shareholder, employee, officer or director of or consultant
to Employer and its predecessors, except to the extent such use or disclosure is
(i) necessary to the performance of this Agreement and in furtherance of
Employer's best interests, (ii) required by applicable law, (iii) lawfully
obtainable from other sources, or (iv) authorized in writing by Employer. The
provisions of this Section 8(g) shall survive the expiration, suspension or
termination, for any reason, of this Agreement.
(h) Trade Secrets.
--------------
Employee, prior to and during the term of employment, has had and will
have access to and become acquainted with various trade secrets, consisting of
software, plans, formulas, patterns, devices, secret inventions, processes,
customer lists, contracts, and compilations of information, records and
specifications that are owned by Employer or by its affiliates and regularly
used in the operation of their respective businesses and that may give Employer
an opportunity to obtain an advantage over competitors who do not know or use
such trade secrets. Employee agrees and acknowledges that Employee has been
granted access to these valuable trade secrets only by virtue of the
confidential relationship created by Employee's employment and Employee's prior
relationship to, interest in and fiduciary relationships to Employer and its
predecessors. Employee shall not disclose any of the aforesaid trade secrets,
directly or indirectly, or use them in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of
employment by Employer and for its benefit.
All records, files, documents, drawings, specifications, software,
equipment, and similar items relating to the business of Employer or its
affiliates, including without limitation all records relating to customers (the
"Documents"), whether prepared by Employee or otherwise coming into Employee's
possession, shall remain the exclusive property of Employer or such affiliates
and shall not be removed from the premises of Employer or its affiliates under
any circumstances whatsoever without the prior consent of a senior executive
officer of Employer. Upon termination of employment, Employee agrees to promptly
deliver to Employer all Documents in the possession or under the control of
Employee.
(i) Severability.
-------------
If any provision of this Agreement is held invalid or unenforceable,
the remainder of this Agreement shall nevertheless remain in full force and
effect, and if any provision is held invalid or unenforceable with respect to
particular circumstances, it shall nevertheless remain in full force and effect
in all other circumstances, to the fullest extent permitted by law.
(j) Withholding; Deductions.
------------------------
All compensation payable hereunder, including salary and other
benefits, shall be subject to applicable taxes, withholding and other required,
normal or elected employee deductions.
18
<PAGE>
(k) Section Headings.
-----------------
Section and other headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(l) Counterparts.
-------------
This Agreement and any amendment hereto may be executed in several
counterparts. All of such counterparts shall constitute one and the same
agreement and shall become effective when a copy signed by each party has been
delivered to the other party.
(m) Interpretation.
---------------
Any rule of law, including but not limited to Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that drafted it
has no application and is expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties.
(n) Antidilution Adjustments.
-------------------------
All amounts of shares, options and option exercise prices referred to
in this Agreement shall be subject to appropriate adjustment for stock splits,
reverse stock splits, stock dividends, restructurings and recapitalizations
occurring after the date hereof.
(o) No Duty to Mitigate.
--------------------
If the Gemstar Closing occurs, all amounts payable pursuant to this
Agreement subsequent to such closing shall be paid without regard to whether
Employee has taken actions to mitigate damages.
(p) Certain Covenants. This Section 8(p) will apply only if the Gemstar
------------------
Closing does not occur. Employee acknowledges that the services to be furnished
by Employee hereunder and the rights and privileges granted to the Company by
Employee are of a special, unique, unusual, extraordinary, and intellectual
character which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in any action at law, and a
breach or threatened breach by Employee of any of the provisions contained in
this Section 8(p) may cause the Company irreparable injury and damage. In order
to induce the Company to enter into this Agreement, Employee covenants and
agrees that:
Except as otherwise permitted by Section 2, during (a) the term of
this Agreement, (b) any periods that Employee is employed by the Company or
receiving payments of Base Salary from the Company in the nature of compensation
or severance (except in any instance in which Employee shall accept other
employment under Section 4.1(i)(i)(C) hereof), and (c) a period of one year
following the termination of this
19
<PAGE>
Agreement pursuant to Section 4(c) hereof, Employee will not engage in, perform
services for, or have an interest in, directly or indirectly, any business which
competes with business in which the Company is then engaged (and, in the case of
any period following the expiration of Employee's employment, was engaged at the
end of his employment), it being understood that the business of the Company
currently is principally the business of magazine publishing and interactive and
cable businesses primarily related to television listings and television
guidance, and will not directly or indirectly own, manage, operate, join,
control or participate in the ownership, management, operation or control of, or
be employed by, or connected in any manner with any corporation, firm or
business that is so engaged. The foregoing does not prohibit Employee's
ownership of less than five percent (5%) of the outstanding common stock of any
company whose shares are publicly traded on a national stock exchange, are
reported on NASDAQ, or are regularly traded in the over-the-counter market by a
member of a national securities exchange.
Employee shall not, during the term of this Agreement or for a period
of eighteen months thereafter, directly or indirectly, induce or attempt to
induce any employee of the Company or its affiliates, to leave the Company or
its affiliates or to render services for any other person, firm or corporation.
Employee acknowledges that the relationship between the parties hereto
is exclusively that of employer and employee, and that the Company's obligations
to him are exclusively contractual in nature. The Company and/or its affiliates
shall be the sole owner or owners of all the fruits and proceeds of Employee's
services hereunder, including, but not limited to, all ideas, concepts, formats,
suggestions, developments, arrangements, designs, packages, programs, scripts,
audio visual materials, promotional materials, photography and other
intellectual properties and creative works which the Employee may prepare,
create, produce, acquire, or otherwise develop in connection with and during his
employment hereunder, including, without limitation, all copyrights and all
rights to reproduce, use, authorize others to use and sell such properties or
works at any time or place for any purpose, free and clear of any claims by
Employee (or anyone claiming under him) of any kind or character whatsoever
(other than Employee's right to compensation hereunder). Employee agrees that he
will have no right in or to such properties or works and shall not use such
properties or works for his own benefit or the benefit of any other person.
Employee shall, at the request of the Company, execute such assignments,
certificates, applications, filings, instruments or other documents, consistent
herewith, as the Company may from time to time reasonably deem necessary or
desirable to evidence, establish, maintain, perfect, protect, enforce or defend
its right, title and interest in or to any such properties or works.
Employee agrees not to criticize Company, its affiliates, officers,
shareholders or employees and agrees further not to speak of Company, its
affiliates, officers, shareholders or employees in an unflattering way. Company
agrees not to criticize Employee and further agrees not to speak of Employee in
an unflattering way.
Employee agrees that during the term of this Agreement and thereafter
he will cooperate in Company's defense against any threatened or pending
litigation or in
20
<PAGE>
any investigation or proceeding by any governmental agency or body that relates
to any events or actions which occurred during the term of this Agreement.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Company"
TV Guide, Inc.
By:
------------------------------
Name:
Title:
"Employee"
---------------------------------
Peter C. Boylan III
22
<PAGE>
SCHEDULE I
ANNUAL INCENTIVE BONUS COMPENSATION
(a) Subject to the terms and conditions of this Agreement, and in addition
to the Base Salary and other Additional Benefits to which Employee may otherwise
be entitled from Employer, at the end of each Compensation Period (or portion
thereof) during the term of this Agreement, Employee shall be deemed to have
earned a bonus (the "Annual Incentive Bonus"), payable by Employer to Employee
on the last day of the Compensation Period (or such sooner date as of which this
Agreement terminates), commencing with the Compensation Period ending December
31, 1999 or, if applicable, the date of the Gemstar Closing. The target amount
of such Annual Incentive Bonus shall be 50% of the Employee's Base Salary in
effect on the last day of the applicable Compensation Period. The actual amount
of the Annual Incentive Bonus payable to the Employee shall be determined based
on criteria determined by mutual agreement of the Employee and, prior to the
Gemstar Closing, the Compensation Committee of the Board of Directors and, after
the Gemstar Closing, the Chief Executive Officer of Employer, which criteria
shall be established at least annually and not later than the end of the first
month of the applicable Compensation Period. Notwithstanding the foregoing, any
Annual Incentive Bonus otherwise payable shall be prorated in the event that a
Compensation Period is less than 12 months due to a change in Compensation
Period.
(b) The Annual Incentive Bonus amount due for each Compensation Period
shall be paid by Employer to Employee at the end of each Compensation Period (or
such sooner date as of which this Agreement terminates) (the "Due Date").
Employee may, at his own expense, audit the applicable records at the place
where Employer maintains the same in order to verify the calculation of the
Annual Incentive Bonus. Any such audit shall be conducted only by a reputable
public accountant during reasonable business hours in such manner as not to
interfere with Employer's normal business activities. In no event shall an audit
with respect to the calculation of the Annual Incentive Bonus commence later
than twelve (12) months after the Due Date.
If any audit of Employer's records by Employee reveals that Employer
has failed to properly account for and pay Employee the Annual Incentive Bonus
that should have been paid for that Compensation Period, and the amount of any
Annual Incentive Bonus which Employer has failed to properly account and pay for
in respect of any Compensation Period exceeds by at least three percent (3%) the
amount of Annual Incentive Bonus actually accounted for and paid to Employee for
such Compensation Period, Employer shall, in addition to paying Employee such
overdue amount of Annual Incentive Bonus, reimburse Employee for his direct,
reasonable out-of- pocket expenses incurred in conducting such audit.
(c) The provisions of this Schedule I shall not be deemed to restrict in
any way any rights of the Employer or the Board, acting in good faith, during
the term of this Agreement to dissolve, reorganize or take any other action or
make any other change (fundamental or otherwise) affecting the structure,
existence, organization, operations or business of Employer or any of its
subsidiaries. If at any time during any Compensation
23
<PAGE>
Period, Employer shall be dissolved, the right to Annual Incentive Bonus
payments pursuant to this Agreement shall terminate. If at any time during any
Compensation Period, Employer shall be a party to a merger or sale of all or
substantially all of its assets to another entity, Employer shall (or shall
cause a successor to) provide for adjustment as nearly equivalent as practicable
to preserve to Employee the benefits of this Agreement relating to payment of
Annual Incentive Bonus amounts in respect of the business of Employer or such
successor. Such adjustments by the Board made in good faith shall be conclusive.
(d) All accounting terms or concepts used herein have the meanings assigned
or applied under generally accepted accounting principles, consistently applied.
24
<PAGE>
SCHEDULE II
EXCISE TAX GROSS-UP
(Capitalized terms not defined herein have the meanings ascribed thereto in the
attached Employment Agreement)
(a) In the event it is determined (pursuant to (b) below) or finally
determined (as defined in (c)(iii) below) that any payment, distribution,
transfer, benefit or other event with respect to the Employer or a predecessor,
successor, direct or indirect subsidiary or affiliate of Employer (or any
predecessor, successor of affiliate of any of them, and including any benefit
plan of any of them), to or for the benefit of Employee or Employee's
dependents, heirs or beneficiaries (whether such payment, distribution,
transfer, benefit or other event occurs pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Schedule II) (each a "Payment" and collectively the "Payments") is or
was subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, and any successor provision or any comparable
provision of state or local income tax law (collectively, "Section 4999"), or
any interest, penalty or addition to tax is or was incurred by Employee with
respect to such excise tax (such excise tax, together with any such interest,
penalty, addition to tax, and costs (including professional fees) hereinafter
collectively referred to as the "Excise Tax"), then, within 10 days after such
determination or final determination, as the case may be, Employer shall pay to
Employee an additional cash payment (hereinafter referred to as the "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes,
interest, penalties, additions to tax and costs imposed or incurred with respect
to the Gross-Up Payment (including, without limitation, any income and excise
taxes imposed upon the Gross-Up Payment), Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon such Payment or Payments.
This provision is intended to put Employee in the same position as Employee
would have been had no Excise Tax been imposed upon or incurred as a result of
any Payment.
(b) Except as provided in subsection (c) below, the determination that a
Payment is subject to an Excise Tax shall be made in writing by a certified
public accounting firm selected by Employee ("Employee's Accountant"). Such
determination shall include the amount of the Gross-Up Payment and detailed
computations thereof, including any assumptions used in such computations (the
written determination of the Employee's Accountant, hereinafter, the "Employee's
Determination"). The Employee's Determination shall be reviewed on behalf of
Employer by a certified public accounting firm selected by Employer (the
"Employer's Accountant"). The Employer shall notify Employee within 10 business
days after receipt of the Employee's Determination of any disagreement or
dispute therewith, and failure to so notify within that period shall be
considered an agreement by Employer with the Employee's Determination,
obligating Employer to make payment as provided in subsection (a) above within
10 days from the expiration of such 10 business-day period. In the event of an
objection by Employer to the Employee's Determination, any amount not in dispute
shall be paid within 10 days following the 10 business-day period referred to
herein, and with respect to the amount in
25
<PAGE>
dispute the Employee's Accountant and Employer's Accountant shall jointly select
a third nationally recognized certified public accounting firm to resolve the
dispute and the decision of such third firm shall be final, binding and
conclusive upon the Employee and Employer. In such a case, the third accounting
firm's findings shall be deemed the binding determination with respect to the
amount in dispute, obligating Employer to make any payment as a result thereof
within 10 days following the receipt of such third accounting firm's
determination. All fees and expenses of each of the accounting firms referred to
in this Schedule II shall be borne solely by Employer.
(c) (i) Employee shall notify Employer in writing of any claim by the
Internal Revenue Service (or any successor thereof) or any state or local taxing
authority (individually or collectively, the "Taxing Authority") that, if
successful, would require the payment by Employer of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 30 days
after Employee receives written notice of such claim and shall apprise Employer
of the nature of such claim and the date on which such claim is requested to be
paid; provided, however, that failure by Employee to give such notice within
such 30-day period shall not result in a waiver or forfeiture of any of
Employee's rights under this Schedule II except to the extent of actual damages
suffered by Employer as a result of such failure. Employee shall not pay such
claim prior to the expiration of the 15-day period following the date on which
Employee gives such notice to Employer (or such shorter period ending on the
date that any payment of taxes, interest, penalties or additions to tax with
respect to such claim is due). If Employer notifies Employee in writing prior to
the expiration of such 15-day period that it desires to contest such claim (and
demonstrates to the reasonable satisfaction of Employee its ability to make the
payments to Employee which may ultimately be required under this section before
assuming responsibility for the claim), Employee shall:
(A) give Employer any information reasonably requested by Employer
relating to such claim;
(B) take such action in connection with contesting such claim as Employer
shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to
such claim by an attorney selected by Employer that is reasonably
acceptable to Employee;
(C) cooperate with Employer in good faith in order effectively to contest
such claim; and
(D) permit Employer to participate in any proceedings relating to such
claim; provided, however, that Employer shall bear and pay directly
all attorneys fees, costs and expenses (including additional interest,
penalties and additions to tax) incurred in connection with such
contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for all taxes (including, without limitation, income
and excise taxes), interest, penalties and additions to tax imposed in
relation to such claim and in relation to the payment of such costs
and expenses or
26
<PAGE>
indemnification. Without limitation on the foregoing provisions of
this Schedule II, and to the extent its actions do not unreasonably
interfere with or prejudice Employee's disputes with the Taxing
Authority as to other issues, Employer shall control all proceedings
taken in connection with such contest and, in its reasonable
discretion, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Employee to pay the tax, interest or penalties claimed and sue for a
refund or contest the claim in any permissible manner, and Employee
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as Employer shall determine; provided,
however, that if Employer directs Employee to pay such claim and sue
for a refund, Employer shall advance an amount equal to such payment
to Employee, on an interest-free basis, and shall indemnify and hold
Employee harmless, on an after-tax basis, from all taxes (including,
without limitation, income and excise taxes), interest, penalties and
additions to tax imposed with respect to such advance or with respect
to any imputed income with respect to such advance, as any such
amounts are incurred; and, further, provided, that any extension of
the statute of limitations relating to payment of taxes, interest,
penalties or additions to tax for the taxable year of Employee with
respect to which such contested amount is claimed to be due is limited
solely to such contested amount; and, provided, further, that any
settlement of any claim shall be reasonably acceptable to Employee and
Employer's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and
Employee shall be entitled to settle or contest, as the case may be,
any other issue.
(ii) If, after receipt by Employee of an amount advanced by Employer
pursuant to paragraph (c)(i), Employee receives any refund with respect to such
claim, Employee shall (subject to Employer's complying with the requirements of
this Schedule II) promptly pay to Employer an amount equal to such refund
(together with any interest paid or credited thereon after taxes applicable
thereto), net of any taxes (including without limitation any income or excise
taxes), interest, penalties or additions to tax and any other costs incurred by
Employee in connection with such advance, after giving effect to such repayment.
If, after the receipt by Employee of an amount advanced by Employer pursuant to
paragraph (c)(i), it is finally determined that Employee is not entitled to any
refund with respect to such claim, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall be treated as
a Gross-Up Payment and shall offset, to the extent thereof, the amount of any
Gross-Up Payment otherwise required to be paid.
(iii) For purposes of this Schedule II, whether the Excise Tax is
applicable to a Payment shall be deemed to be "finally determined" upon the
earliest of: (A) the expiration of the 15-day period referred to in paragraph
(c)(i) above if Employer has not notified Employee that it intends to contest
the underlying claim, (B) the expiration of
27
<PAGE>
any period following which no right of appeal exists, (C) the date upon which a
closing agreement or similar agreement with respect to the claim is executed by
Employee and the Taxing Authority (which agreement may be executed only in
compliance with this Schedule II), (D) the receipt by Employee of notice from
Employer that it no longer seeks to pursue a contest (which notice shall be
deemed received if Employer does not, within 15 days following receipt of a
written inquiry from Employee, affirmatively indicate in writing to Employee
that Employer intends to continue to pursue such contest). (d) As a result of
uncertainty in the application of Section 4999 that may exist at the time of any
determination that a Gross-Up Payment is due, it may be possible that in making
the calculations required to be made hereunder, the parties or their accountants
shall determine that a Gross-Up Payment need not be made (or shall make no
determination with respect to a Gross-Up Payment) that properly should be made
("Underpayment"), or that a Gross-Up Payment not properly needed to be made
should be made ("Overpayment"). The determination of any Underpayment shall be
made using the procedures set forth in paragraph (b) above and shall be paid to
Employee as an additional Gross-Up Payment. The Employer shall be entitled to
use procedures similar to those available to Employee in paragraph (b) to
determine the amount of any Overpayment (provided that Employer shall bear all
costs of the accountants as provided paragraph (b)). In the event of a
determination that an Overpayment was made, any such Overpayment shall be
treated for all purposes as a loan to Employee with interest at the applicable
Federal rate provided for in Section 1274(d) of the Code; provided, however,
that the amount to be repaid by Employee to Employer shall be subject to
reduction to the extent necessary to put Employee in the same after-tax position
as if such Overpayment were never made.
28
<PAGE>
EXHIBIT 99.13
Option on Gemstar Stock
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into as of October
4, 1999, by and between TV Guide, Inc., a Delaware corporation (the "Grantee"),
and Gemstar International Group Limited, a British Virgin Islands corporation to
be continued and domesticated as a Delaware corporation (the "Grantor").
WHEREAS, Grantee and Grantor are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides,
among other things, for the merger of a subsidiary of Grantor into Grantee;
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Grantor grant to Grantee
an option to purchase up to 17,570,794 shares of the Ordinary Shares, par value
$0.01 per share, of Grantor (the "Common Stock"), upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Grantee to enter into the Merger Agreement,
Grantor is willing to grant Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option. Subject to the terms and conditions set forth herein,
----------
Grantor hereby grants to Grantee an irrevocable option (the "Option") to
purchase shares of Common Stock (together with rights attached thereto to
purchase Series A Junior Participating Preferred Stock of the Grantor issued
pursuant to the Rights Agreement (the "Rights Agreement") dated as of July 10,
1998 between the Grantor and American Stock Transfer & Trust Company, as rights
agent) (the "Shares"), at a cash purchase price equal to $83.625 per share (the
"Purchase Price"), up to a maximum of 17,570,794 Shares (as may be adjusted as
provided herein), for a total amount of $1,469,357,648.25 (the "Total Purchase
Price").
<PAGE>
Option on Gemstar Stock
2. Exercise.
--------
a. The Option may be exercised by Grantee, in whole or in part, at
any time, or from time to time, following the occurrence of a Triggering Event,
as defined herein, and prior to the termination of the Option in accordance with
the terms of this Agreement, to purchase Shares. In the event Grantee wishes to
exercise the Option, Grantee shall send a written notice to Grantor (the
"Exercise Notice") specifying (i) a date for the closing of such purchases
(subject to the HSR Act (as defined below)) and any applicable regulatory
approvals) not later than 20 business days and not earlier than 5 business days
following the date such notice is given, and (ii) the number of Shares for which
the Option is being exercised. Grantor shall give Grantee prompt written notice
of any Triggering Event.
b. For purposes of this Agreement, a "Triggering Event" shall mean:
i. at any time prior to termination of the Merger Agreement
pursuant to Section 7.1 thereof, (A) a Grantor Takeover Proposal shall have been
proposed by any person other than Grantee, or any person other than Grantee
shall have publicly announced an intention (whether or not conditional) to
propose a Grantor Takeover Proposal, and (B) thereafter the Grantor stockholder
approvals contemplated under Section 5.1(e) of the Merger Agreement are not
obtained at the Grantor's meeting of stockholders; or
ii. the date on which Grantee acquires actual knowledge of a
breach by Grantor of any covenant or agreement contained in any of Sections 4.3,
5.1(a), 5.1(e), 5.3 or 5.11 of the Merger Agreement (an "Option Triggering
Breach"). Grantor shall promptly advise Grantee orally and in writing of any
Option Triggering Breach.
As used in this Agreement, "Grantor Takeover Proposal" shall mean,
other than as provided in and contemplated by the Merger Agreement, any proposal
(whether or not in writing and whether or not delivered to Grantor's
stockholders generally) regarding (i) a merger,
<PAGE>
Option on Gemstar Stock
consolidation, purchase of assets (other than purchases of assets or inventory
in the ordinary course of business), tender offer, share exchange or other
business combination or similar transaction involving Grantor or any of its
subsidiaries, (ii) the acquisition in any manner, directly or indirectly, of any
equity interest in or any voting securities of Grantor or any of its
subsidiaries which constitutes 35% or more of the total of such equity interests
or voting securities, or a substantial portion of the assets of Grantor or any
of its subsidiaries, (iii) the acquisition by any person of beneficial ownership
or a right to acquire beneficial ownership of, or the formation of any "group"
(as defined under Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder) which
beneficially owns, or has the right to acquire beneficial ownership of 35% or
more of the then outstanding shares of capital stock of Grantor, or (iv) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
3. Adjustment. In the event of any change in the number of issued and
----------
outstanding shares of Common Stock by reason of any stock dividend, stock split,
split-up, merger, recapitalization, reorganization, conversion, extraordinary
dividend, distribution, exchange of shares or other change in the corporate or
capital structure of Grantor, the number and/or kind of Shares subject to this
Option and the purchase price per Share shall be appropriately adjusted to
restore Grantee to its rights hereunder, including its right to purchase Shares
representing 14.9% of the capital stock of Grantor entitled to vote generally
for the election of the directors of Grantor which is issued and outstanding
immediately after the exercise of the Option at an aggregate purchase price
equal to the Total Purchase Price. In the event that any additional shares of
Common Stock are issued after the date of this Agreement (other than pursuant to
an event described in the preceding sentence), the number of Shares subject to
this Option shall be increased by 14.9% of the number of the additional shares
of Common Stock so issued (and such
<PAGE>
Option on Gemstar Stock
additional Shares shall have a purchase price per share equal to the Purchase
Price). Notwithstanding anything in this Agreement, the number of Shares subject
to this Option shall never exceed 14.9% of the outstanding Shares of Grantor.
4. Conditions to Delivery of Shares. Grantor's obligation to deliver
--------------------------------
Shares upon exercise of the Option is subject only to the following conditions:
a. No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares shall be in effect.
b. Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated.
c. Any other consent, approval, order, notification, or
authorization, the failure of which to obtain or make would make the issuance of
the Shares illegal, shall have been obtained or made and be in full force and
effect.
5. The Closing.
-----------
a. Any closing hereunder shall take place on the date specified by
Grantee in its Stock Exercise Notice, at 10:00 A.M., local time, at the offices
of Baker & Botts, L.L.P., New York, New York, or, if the conditions to closing
have not been satisfied, on the second business day following the satisfaction
of such conditions, or at such other time and place as the parties hereto may
agree (the "Closing Date"). On the Closing Date, Grantor will deliver to Grantee
a certificate or certificates, representing the Shares in the denominations
designated by Grantee in the Exercise Notice and Grantee will purchase such
Shares from Grantor at the price per Share equal to the Purchase Price. Any
payment made by Grantee to Grantor pursuant to this Agreement shall be made by
wire transfer of immediately available funds to a bank account designated by
Grantor. The certificates representing the Shares shall bear an appropriate
legend
<PAGE>
Option on Gemstar Stock
relating to the fact that such Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act").
b. If at the time of any issuance of Shares hereunder the Grantor
shall have issued any rights or other securities which are attached to or
otherwise associated with the Common Stock, then each such Share also shall
represent such rights or other securities with terms substantially the same as,
and at least as favorable to Grantee as, are provided under any rights agreement
or similar agreement of the Grantor then in effect.
c. Upon the delivery of the applicable Purchase Price at the
Closing, Grantee shall be deemed to be the holder of record of the Shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Grantor may then be closed or that certificates representing
such Shares of Common Stock may not have been delivered to Grantee. Grantor
shall pay all expenses, and any and all taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Agreement in the name of Grantee.
6. Representations and Warranties of Grantor. Grantor represents and
-----------------------------------------
warrants to Grantee that (a) Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the British Virgin Islands and
has the requisite corporate power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement by Grantor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Grantor and this Agreement has been duly
executed and delivered by a duly authorized officer of Grantor and constitutes a
valid and binding obligation of Grantor, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity; (c) Grantor has taken all
<PAGE>
Option on Gemstar Stock
necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by Grantor upon
exercise of the Option and paid for by Grantee as contemplated hereby, will be
duly authorized, validly issued, fully paid and non-assessable and free and
clear of any lien, pledge, security interest, claim or other encumbrance (other
than those created by this Agreement) and not subject to any preemptive rights;
(d) the execution and delivery of this Agreement by Grantor and, except as
otherwise required by the HSR Act and for such filings as are required by the
National Association of Securities Dealers, Inc. ("NASDAQ"), the consummation by
it of the transactions contemplated hereby do not require the consent, waiver,
approval or authorization of or any filing with any person or public authority
and will not violate, result in a breach of or the acceleration of any
obligation under, or constitute a default under, any provision of Grantor's
articles of association, memorandum of association or bylaws, or any material
indenture, mortgage, lien, lease, agreement, contract, instrument, order, law,
rule, regulation, judgment, ordinance, or decree, or restriction by which
Grantor or any of its subsidiaries or any of their respective properties or
assets is bound; (e) no "fair price," "moratorium," "control share acquisition,"
"interested shareholder" or other form of antitakeover statute or regulation, or
similar provision contained in the amended and restated articles of association
and memorandum of association or bylaws of Grantor, is or shall be applicable to
any of the transactions contemplated by this Agreement, and the Board of
Directors of the Grantor has taken all action to approve the transactions
contemplated hereby to the extent necessary to avoid any such application; and
(f) Grantor has taken all corporate action necessary so that the grant and any
subsequent exercise of the Option by Grantee or other exercise by Grantee of any
its rights hereunder will not result in the separation or exercisability of the
rights under the Rights Agreement or in any nullification of rights under the
Rights Agreement held by Grantee or any of its Affiliates or Associates (as
<PAGE>
Option on Gemstar Stock
defined in the Rights Agreement).
7. Representations And Warranties of Grantee. Grantee represents and
-----------------------------------------
warrants to Grantor that (a) the execution and delivery of this Agreement by
Grantee and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and this Agreement has been duly executed and delivered by a duly authorized
officer of Grantee and constitutes a valid and binding obligation of Grantee;
and (b) Grantee is acquiring the Option and, if and when it exercises the
Option, will be acquiring the Shares issuable upon the exercise thereof for its
own account and not with a view to distribution or resale in any manner which
would be in violation of the Securities Act.
8. Non-Avoidance and Further Assurances.
------------------------------------
a. Grantor agrees not to avoid or seek to avoid (whether by charter
amendment or through reorganization, consolidation, merger, issuance of rights,
dissolution or sale of assets, or by any other voluntary act) the observance or
performance of any of the covenants, agreements or conditions to be observed or
performed hereunder by Grantor and not to take any action which would cause any
of its representations or warranties not to be true in any material respect.
b. Grantor agrees, promptly after this date, to take all actions as
may from time to time be required (including (i) making promptly its respective
filings, and thereafter making any required submissions, under the HSR Act with
respect to the transactions contemplated herein, and (ii) in the event that any
other prior approval of or notice to any regulatory authority is necessary under
any applicable federal, state or local law before the Option may be exercised,
cooperating fully with Grantee in preparing and processing the required
applications or notices) in order to permit Grantee to exercise the Option and
purchase Shares pursuant to such exercise.
<PAGE>
Option on Gemstar Stock
9. Substitute Option.
-----------------
a. In the event that prior to the termination of this Option in
accordance with this Agreement, Grantor shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Grantor and Grantor shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
Shares shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property or the then outstanding Shares shall
after such merger represent less than 50% of the outstanding voting shares and
voting share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option which the
Grantee reasonably believes to have equivalent value and equivalent terms (the
"Substitute Option"), at the election of Grantee, to acquire shares of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation. For purposes of this Agreement, Acquiring
Corporation shall mean (i) the continuing or surviving corporation of a
consolidation or merger with Grantor (if other than Grantor), (ii) Grantor in a
merger in which Grantor is the continuing or surviving person, and (iii) the
transferee of all or substantially all of Grantor's assets.
b. In no event shall the Substitute Option be exercisable for more
than 14.9% of the shares of the issuer of the Substitute Option. Grantor shall
not enter into any transaction described in subsection (a) of this Section
unless the Acquiring Corporation and any person that
<PAGE>
Option on Gemstar Stock
controls the Acquiring Corporation assume in writing all the obligations of
Grantor hereunder.
10. Exchange; Replacement. This Agreement and the Option are
---------------------
exchangeable, without expense, at the option of Grantee upon presentation and
surrender of this Agreement at the principal office of Grantor, for other
Agreements providing for Options of different denominations entitling Grantee to
purchase on the same terms and subject to the same conditions as set forth in
this Agreement in the aggregate the same number of shares of Common Stock
purchasable at such time hereunder, subject to corresponding adjustments in the
number of shares of Common Stock purchasable upon exercise so that the aggregate
number of such shares under all Agreements issued in respect of this Agreement
shall not exceed 14.9% of the outstanding Shares of Common Stock of Grantor
(after giving effect to Shares of Common Stock issued or issuable pursuant to
the Option). Unless the context shall require otherwise, the terms "Agreement"
and "Option" as used in this Agreement include any Agreements and related
options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon (i) receipt by Grantor of reasonably satisfactory evidence of
the loss, theft, destruction or mutilation of this Agreement, (ii) receipt by
Grantor of reasonably satisfactory indemnification in the case of loss, theft or
destruction and (iii) surrender and cancellation of this Agreement in the case
of mutilation, Grantor will execute and deliver a new Agreement of like tenor
and date. Any new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Grantor, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by any person other than Grantee.
11. Listing of Shares; Filings; Governmental Consents. Subject to
-------------------------------------------------
applicable law and the rules and regulations of the NASDAQ, when the Option
becomes exercisable hereunder, Grantor will promptly file an application to list
the Shares on the NASDAQ and will use all reasonable best efforts to obtain
approval of such listing and to effect all necessary filings by
<PAGE>
Option on Gemstar Stock
Grantor under the HSR Act and the applicable laws of each state and foreign
jurisdiction; provided, however, that if Grantor is unable to effect such
listing on the NASDAQ by the Closing Date, Grantor will nevertheless be
obligated to deliver the Shares upon the Closing Date. Each of the parties
hereto will use its reasonable best efforts to obtain consents of all third
parties and governmental authorities, if any, necessary to the consummation of
the transactions contemplated.
12. Registration Rights.
-------------------
a. In the event that Grantee shall desire to sell any of the Shares
within three years after the purchase of such Shares pursuant hereto, and such
sale requires, in the opinion of counsel to Grantee, which opinion shall be
reasonably satisfactory to Grantor and its counsel, registration of such Shares
under the Securities Act, Grantor will cooperate with Grantee and any
underwriters in registering such Shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, and entering into
an underwriting agreement with such underwriters upon such terms and conditions
as are customarily contained in underwriting agreements with respect to
secondary distributions; provided that Grantor shall not be required to have
declared effective more than two registration statements hereunder and shall be
entitled to delay the filing or effectiveness of any registration statement for
up to 135 days if the offering would, in the judgment of the Board of Directors
of Grantor, require premature disclosure of any material corporate development
or material transaction involving Grantor or interfere with any previously
planned securities offering by Grantor.
b. If the Common Stock is registered pursuant to the provisions of
this Section, Grantor agrees (i) to furnish copies of the registration statement
and the prospectus relating to the Shares covered thereby in such numbers as
Grantee may from time to time
<PAGE>
Option on Gemstar Stock
reasonably request and (ii) if any event shall occur as a result of which it
becomes necessary to amend or supplement any registration statement or
prospectus, to prepare and file under the applicable securities laws such
amendments and supplements as may be necessary to keep available for at least 90
days a prospectus covering the Common Stock meeting the requirements of such
securities laws, and to furnish Grantee such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. Grantor shall bear the cost of the registration,
including, but not limited to, all registration and filing fees, printing
expenses, and fees and disbursements of counsel and accountants for Grantor,
except that Grantee shall pay the fees and disbursements of its counsel, and the
underwriting fees and selling commissions applicable to the shares of Common
Stock sold by Grantee.
c. Grantor shall indemnify and hold harmless (i) Grantee, its
affiliates and its officers and directors and each person who controls Grantee
within the meaning of the Securities Act or Exchange Act and (ii) each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act or the Exchange Act (collectively, the "Underwriters") ((i)
and (ii) being referred to as "Indemnified Parties") against any losses, claims,
damages, liabilities or expenses, to which the Indemnified Parties may become
subject, insofar as such losses, claims, damages, liabilities (or actions in
respect thereof) and expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained or
incorporated by reference in any registration statement or prospectus filed
pursuant to this paragraph, 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 therein not misleading; provided, however,
that Grantor will not be liable in any such case to the extent that any such
loss, liability, claim, damage or expense arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any such
<PAGE>
Option on Gemstar Stock
documents in reliance upon and in conformity with written information furnished
to Grantor by the Indemnified Parties expressly for use or incorporation by
reference therein.
d. Grantee and the Underwriters shall indemnify and hold harmless
Grantor, its affiliates and its officers and directors and each person who
controls Grantee within the meaning of the Securities Act or Exchange Act
against any losses, claims, damages, liabilities or expenses to which Grantor,
its affiliates and its officers and directors may become subject, insofar as
such losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement of any material
fact contained or incorporated by reference in any registration statement filed
pursuant to this section, 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 therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Grantor by Grantee or the
Underwriters, as applicable, specifically for use or incorporation by reference
therein.
13. Expenses. Each party hereto shall pay its own expenses incurred in
--------
connection with this Agreement, except as otherwise specifically provided
herein.
14. Specific Performance. Grantor acknowledges that if Grantor fails to
--------------------
perform any of its obligations under this Agreement immediate and irreparable
harm or injury would be caused to Grantee for which money damages would not be
an adequate remedy. In such event, Grantor agrees that Grantee shall have the
right, in addition to any other rights it may have, to specific performance of
this Agreement.
15. Notice. All notices, requests, demands and other communications
------
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery
<PAGE>
Option on Gemstar Stock
upon the party for whom it is intended or delivered by registered or certified
mail, return receipt requested, or if sent by facsimile transmission, upon
receipt of oral confirmation that such transmission has been received, to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
If to Grantee: TV Guide, Inc.
7140 South Lewis Avenue
Tulsa, OK 74136-5422
Attention: Peter Boylan
Facsimile: (918) 488-4928
With a copy to: Baker & Botts, L.L.P.
599 Lexington Avenue
New York, NY 10022-6030
Attention: Elizabeth Markowski, Esq.
Facsimile: (212) 705-5125
If to Grantor: Gemstar Holding Corp.
135 North Los Robles Avenue, Suite 800
Pasadena, CA 91101
Attention: General Counsel
Facsimile: (626) 792-0257
With a copy to: O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, CA 92660
Attention: David A. Krinsky, Esq.
Facsimile: (714) 669-6994
16. Parties in Interest. This Agreement shall inure to the benefit of and
-------------------
be binding upon the parties named herein and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any person other than Grantor or Grantee, or their successors or assigns,
any rights or remedies under or by reason of this Agreement.
17. Entire Agreement; Amendments. This Agreement, together with the Merger
----------------------------
<PAGE>
Option on Gemstar Stock
Agreement and the other documents referred to therein, contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings, oral
or written, with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but may be changed only by an agreement in
writing signed by the party against whom any waiver, change, amendment,
modification or discharge may be sought.
18. Assignment. No party to this Agreement may assign any of its rights
----------
or obligations under this Agreement without the prior written consent of the
other party hereto, except that Grantee may assign unilaterally any or all of
its rights and obligations hereunder to (i) any of its direct or indirect wholly
owned subsidiaries, or (ii) any person in the event any federal agency objects
to the exercise of the Option, in whole or in part, on grounds relating to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; provided,
however, that no such assignment shall relieve Grantee of its obligations
hereunder if such transferee does not perform such obligations.
19. Headings. The section headings herein are for convenience only and
--------
shall not affect the construction of this Agreement.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
21. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware (without regard to principles
of conflicts of law).
22. Termination. The right to exercise the Option granted pursuant to
-----------
this Agreement shall terminate at the earliest of (i) the Effective Time (as
defined in the Merger Agreement) and
<PAGE>
Option on Gemstar Stock
(ii) 120 days after the Triggering Event (the "Termination Date"). All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares.
23. Extension of Exercise Periods. The 120 day period for exercise of
-----------------------------
certain rights under Section 22 shall be extended (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods, (ii) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise, and (iii) during any period in which Grantee is precluded from
exercising such rights due to an injunction or other legal restriction, plus, in
the case of clauses (i), (ii) and (iii), for an additional period of ten
business days following the obtaining of such approvals or the expiration of
such periods.
24. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Intentionally Left Blank]
<PAGE>
Option on Gemstar Stock
IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement to be
duly executed and delivered on the day and year first above written.
TV GUIDE, INC. GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ PETER C. BOYLAN III By: /s/ HENRY C. YUEN
----------------------------------- ---------------------------------
Name: Peter C. Boylan III Name: Henry C. Yuen
Title: President Title: Chief Executive Officer
<PAGE>
EXHIBIT 99.14
Option on TVG Stock
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into as of October
4, 1999, by and between TV Guide, Inc., a Delaware corporation (the "Grantor"),
and Gemstar International Group Limited, a British Virgin Islands corporation to
be continued and domesticated as a Delaware corporation (the "Grantee").
WHEREAS, Grantee and Grantor are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides,
among other things, for the merger of a subsidiary of Grantee into Grantor;
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Grantor grant to Grantee
an option to purchase up to 26,634,369 shares of Class A Common Stock, par value
$0.01 per share, of Grantor (the "Class A Common Stock"), upon the terms and
subject to the conditions hereof; and
WHEREAS, in order to induce Grantee to enter into the Merger Agreement,
Grantor is willing to grant Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option. Subject to the terms and conditions set forth herein,
----------
Grantor hereby grants to Grantee an irrevocable option (the "Option") to
purchase shares of Class A Common Stock (the "Shares"), at a cash purchase price
equal to $41.53125 per Share (the "Purchase Price"), up to a maximum of
26,634,369 Shares of Class A Common Stock (as may be adjusted as provided
herein), for a total amount of $1,106,158,637.53 (the "Total Purchase Price").
2. Exercise.
--------
a. The Option may be exercised by Grantee, in whole or in part, at
any time, or from time to time, following the occurrence of a Triggering Event,
as defined herein, and prior
<PAGE>
Option on TVG Stock
to the termination of the Option in accordance with the terms of this Agreement,
to purchase Shares of Class A Common Stock. In the event Grantee wishes to
exercise the Option, Grantee shall send a written notice to Grantor (the
"Exercise Notice") specifying (i) a date for the closing of such purchases
(subject to the HSR Act (as defined below)) and any applicable regulatory
approvals) not later than 20 business days and not earlier than 5 business days
following the date such notice is given, and (ii) the number of Shares of Class
A Common Stock for which the Option is being exercised. Grantor shall give
Grantee prompt written notice of any Triggering Event.
b. For purposes of this Agreement, a "Triggering Event" shall mean:
i. at any time prior to termination of the Merger Agreement
pursuant to Section 7.1 thereof, (A) a Grantor Takeover Proposal shall have been
proposed by any person other than Grantee, or any person other than Grantee
shall have publicly announced an intention (whether or not conditional) to
propose a Grantor Takeover Proposal and (B) thereafter the Grantor stockholder
approvals contemplated under Section 5.1(e) of the Merger Agreement are not
obtained at the Grantor's meeting of stockholders; or
ii. the date on which Grantee acquires actual knowledge of a
breach by Grantor of any covenant or agreement contained in any of Sections 4.2,
5.1(a) , 5.1(e) or 5.3 of the Merger Agreement (an "Option Triggering Breach").
Grantor shall promptly advise Grantee orally and in writing of any Option
Triggering Breach.
As used in this Agreement, "Grantor Takeover Proposal" shall mean,
other than as provided in and contemplated by the Merger Agreement, any proposal
(whether or not in writing and whether or not delivered to Grantor's
stockholders generally) regarding (i) a merger, consolidation, purchase of
assets (other than purchases of assets or inventory in the ordinary course of
business), tender offer, share exchange or other business combination or similar
<PAGE>
Option on TVG Stock
transaction involving Grantor or any of its subsidiaries, (ii) the acquisition
in any manner, directly or indirectly, of any equity interest in or any voting
securities of Grantor or any of its subsidiaries which constitutes 35% or more
of the total of such equity interests or voting securities, or a substantial
portion of the assets of Grantor or any of its subsidiaries, (iii) the
acquisition by any person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations thereunder) which beneficially owns, or has
the right to acquire beneficial ownership of 35% or more of the then outstanding
shares of capital stock of Grantor, or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
3. Adjustment. In the event of any change in the number of issued and
----------
outstanding shares of Class A Common Stock on Grantor's Class B Common Stock,
par value $0.01 per share (the "Class B Common Stock") by reason of any stock
dividend, stock split, split-up, merger, recapitalization, reorganization,
conversion, extraordinary dividend, distribution, exchange of shares or other
change in the corporate or capital structure of Grantor, the number and/or kind
of Shares of Class A Common Stock subject to this Option and the purchase price
per Share of Class A Common Stock shall be appropriately adjusted to restore
Grantee to its rights hereunder, including its right to purchase Shares
representing 14.9% of the total number of shares of capital stock of Grantor
entitled to vote generally for the election of the directors of Grantor which is
issued and outstanding immediately after the exercise of the Option at an
aggregate purchase price equal to the Total Purchase Price. In the event that
any additional shares of Grantor's Class A Common Stock or Class B Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the preceding sentence), the number of Shares of Class A Common
Stock subject to this Option shall be increased by 14.9%
<PAGE>
Option on TVG Stock
of the number of the additional shares of Grantor's Class A Common Stock and
Class B Common Stock so issued (and such additional Shares of Class A Common
Stock shall have a purchase price per Share equal to the Purchase Price).
Notwithstanding anything in this Agreement, the number of Shares of Class A
Common Stock subject to this Option shall never exceed 14.9% of the total number
of outstanding shares of Grantor's Class A Common Stock and Class B Common
Stock.
4. Conditions to Delivery of Shares. Grantor's obligation to deliver
--------------------------------
Shares of Class A Common Stock upon exercise of the Option is subject only to
the following conditions:
a. No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares of Class A Common Stock shall be in
effect.
b. Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated.
c. Any other consent, approval, order, notification, or
authorization, the failure of which to obtain or make would make the issuance of
the Shares of Class A Common Stock illegal, shall have been obtained or made and
be in full force and effect.
5. The Closing.
-----------
a. Any closing hereunder shall take place on the date specified by
Grantee in its Stock Exercise Notice, at 10:00 A.M., local time, at the offices
of O'Melveny & Myers, Newport Beach, California, or, if the conditions to
closing have not been satisfied, on the second business day following the
satisfaction of such conditions, or at such other time and place as the parties
hereto may agree (the "Closing Date"). On the Closing Date, Grantor will deliver
to Grantee a certificate or certificates, representing the Shares of Class A
Common Stock in the denominations designated by Grantee in the Exercise Notice
and Grantee will purchase such
<PAGE>
Option on TVG Stock
Shares of Class A Common Stock from Grantor at the price per Share equal to the
Purchase Price. Any payment made by Grantee to Grantor pursuant to this
Agreement shall be made by wire transfer of immediately available funds to a
bank account designated by Grantor. The certificates representing the Shares of
Class A Common Stock shall bear an appropriate legend relating to the fact that
such Shares of Class A Common Stock have not been registered under the
Securities Act of 1933, as amended (the "Securities Act").
b. If at the time of any issuance of Shares of Class A Common Stock
hereunder the Grantor shall have issued any rights or other securities which are
attached to or otherwise associated with the Class A Common Stock, then each
such Share also shall represent such rights or other securities with terms
substantially the same as, and at least as favorable to Grantee as, are provided
under any rights agreement or similar agreement of the Grantor then in effect.
c. Upon the delivery of the applicable Purchase Price at the
Closing, Grantee shall be deemed to be the holder of record of the Shares of
Class A Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Grantor may then be closed or that certificates representing
such Shares of Class A Common Stock may not have been delivered to Grantee.
Grantor shall pay all expenses, and any and all taxes and other charges that may
be payable in connection with the preparation, issuance and delivery of stock
certificates under this Agreement in the name of Grantee.
6. Representations and Warranties of Grantor. Grantor represents and
-----------------------------------------
warrants to Grantee that (a) Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement by Grantor and the
consummation by it of the transactions contemplated hereby have been duly
<PAGE>
Option on TVG Stock
authorized by the Board of Directors of Grantor and this Agreement has been duly
executed and delivered by a duly authorized officer of Grantor and constitutes a
valid and binding obligation of Grantor, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity; (c) Grantor has taken all
necessary corporate action to authorize and reserve the Shares of Class A Common
Stock issuable upon exercise of the Option and the Shares of Class A Common
Stock, when issued and delivered by Grantor upon exercise of the Option and paid
for by Grantee as contemplated hereby, will be duly authorized, validly issued,
fully paid and non-assessable and free and clear of any lien, pledge, security
interest, claim or other encumbrance (other than those created by this
Agreement) and not subject to any preemptive rights; (d) the execution and
delivery of this Agreement by Grantor and, except as otherwise required by the
HSR Act, the Communications Act of 1934 and the rules and regulations of the
Federal Communications Commission thereunder and the Exxon Florio Amendment to
the Defense Protection Act of 1998 and for such filings as are required by the
National Association of Securities Dealers, Inc. ("NASDAQ"), the consummation by
it of the transactions contemplated hereby do not require the consent, waiver,
approval or authorization of or any filing with any person or public authority
and will not violate, result in a breach of or the acceleration of any
obligation under, or constitute a default under, any provision of Grantor's
certificate of incorporation or bylaws, or any material indenture, mortgage,
lien, lease, agreement, contract, instrument, order, law, rule, regulation,
judgment, ordinance, or decree, or restriction by which Grantor or any of its
subsidiaries or any of their respective properties or assets is bound; and (e)
no "fair price," "moratorium," "control share acquisition," "interested
shareholder" or other form of antitakeover statute or regulation, including
without limitation, Section 203 of the Delaware General Corporation Law, or
similar provision contained
<PAGE>
Option on TVG Stock
in the certificate of incorporation or bylaws of Grantor, is or shall be
applicable to any of the transactions contemplated by this Agreement, and the
Board of Directors of the Grantor has taken all action to approve the
transactions contemplated hereby to the extent necessary to avoid any such
application.
7. Representations And Warranties of Grantee. Grantee represents and
-----------------------------------------
warrants to Grantor that (a) the execution and delivery of this Agreement by
Grantee and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and this Agreement has been duly executed and delivered by a duly authorized
officer of Grantee and constitutes a valid and binding obligation of Grantee;
and (b) Grantee is acquiring the Option and, if and when it exercises the
Option, will be acquiring the Shares of Class A Common Stock issuable upon the
exercise thereof for its own account and not with a view to distribution or
resale in any manner which would be in violation of the Securities Act.
8. Non-Avoidance and Further Assurances.
------------------------------------
a. Grantor agrees not to avoid or seek to avoid (whether by charter
amendment or through reorganization, consolidation, merger, issuance of rights,
dissolution or sale of assets, or by any other voluntary act) the observance or
performance of any of the covenants, agreements or conditions to be observed or
performed hereunder by Grantor and not to take any action which would cause any
of its representations or warranties not to be true in any material respect.
b. Grantor agrees, promptly after this date, to take all actions as
may from time to time be required (including (i) making promptly its respective
filing, and thereafter making any required submissions, under the HSR Act with
respect to the transaction contemplated herein, and (ii) in the event that any
other prior approval of or notice to any
<PAGE>
Option on TVG Stock
regulatory authority is necessary under any applicable federal, state or local
law before the Option may be exercised, cooperating fully with Grantee in
preparing and processing the required applications or notices) in order to
permit Grantee to exercise the Option and purchase Shares of Class A Common
Stock pursuant to such exercise.
9. Substitute Option.
-----------------
a. In the event that prior to the termination of this Option in
accordance with this Agreement, Grantor shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Grantor and Grantor shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
Shares of Class A Common Stock shall be changed into or exchanged for stock or
other securities of any other person or cash or any other property or the then
outstanding Shares of Class A Common Stock and Class B Common Stock shall after
such merger represent less than 50% of the outstanding voting shares and voting
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option which the Grantee
reasonably believes to have equivalent value and equivalent terms (the
"Substitute Option"), at the election of Grantee, to acquire shares of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation. For purposes of this Agreement, Acquiring
Corporation shall mean (i) the continuing or surviving corporation of a
consolidation or merger with Grantor (if other than Grantor), (ii)
<PAGE>
Option on TVG Stock
Grantor in a merger in which Grantor is the continuing or surviving person, and
(iii) the transferee of all or substantially all of Grantor's assets.
b. In no event shall the Substitute Option be exercisable for more
than 14.9% of the shares of the issuer of the Substitute Option. Grantor shall
not enter into any transaction described in subsection (a) of this Section
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Grantor hereunder.
10. Exchange; Replacement. This Agreement and the Option are
---------------------
exchangeable, without expense, at the option of Grantee upon presentation and
surrender of this Agreement at the principal office of Grantor, for other
Agreements providing for Options of different denominations entitling Grantee to
purchase on the same terms and subject to the same conditions as set forth in
this Agreement in the aggregate the same number of Shares of Class A Common
Stock purchasable at such time hereunder, subject to corresponding adjustments
in the number of Shares of Class A Common Stock purchasable upon exercise so
that the aggregate number of such Shares of Class A Common Stock under all
Agreements issued in respect of this Agreement shall not exceed 14.9% of the
total number of outstanding Shares of Class A Common Stock and Class B Common
Stock of Grantor (after giving effect to Shares of Class A Common Stock issued
or issuable pursuant to the Option). Unless the context shall require otherwise,
the terms "Agreement" and "Option" as used in this Agreement include any
Agreements and related options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon (i) receipt by Grantor of reasonably satisfactory
evidence of the loss, theft, destruction or mutilation of this Agreement, (ii)
receipt by Grantor of reasonably satisfactory indemnification in the case of
loss, theft or destruction and (iii) surrender and cancellation of this
Agreement in the case of mutilation, Grantor will execute and deliver a new
Agreement of like tenor and date. Any new Agreement executed and delivered
shall constitute an additional
<PAGE>
Option on TVG Stock
contractual obligation on the part of Grantor, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by any
person other than Grantee.
11. Listing of Shares; Filings; Governmental Consents. Subject to
-------------------------------------------------
applicable law and the rules and regulations of the NASDAQ, when the Option
becomes exercisable hereunder, Grantor will promptly file an application to list
the Shares of Class A Common Stock on the NASDAQ and will use all reasonable
best efforts to obtain approval of such listing and to effect all necessary
filings by Grantor under the HSR Act and the applicable laws of each state and
foreign jurisdiction; provided, however, that if Grantor is unable to effect
such listing on the NASDAQ by the Closing Date, Grantor will nevertheless be
obligated to deliver the Shares of Class A Common Stock upon the Closing Date.
Each of the parties hereto will use its reasonable best efforts to obtain
consents of all third parties and governmental authorities, if any, necessary to
the consummation of the transactions contemplated.
12. Registration Rights.
-------------------
a. In the event that Grantee shall desire to sell any of the Shares
of Class A Common Stock within three years after the purchase of such Shares of
Class A Common Stock pursuant hereto, and such sale requires, in the opinion of
counsel to Grantee, which opinion shall be reasonably satisfactory to Grantor
and its counsel, registration of such Shares of Class A Common Stock under the
Securities Act, Grantor will cooperate with Grantee and any underwriters in
registering such Shares of Class A Common Stock for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, and entering into
an underwriting agreement with such underwriters upon such terms and conditions
as are customarily contained in underwriting agreements with respect to
secondary distributions; provided that Grantor shall not be required to have
declared effective more than two registration statements hereunder and shall be
entitled to
<PAGE>
Option on TVG Stock
delay the filing or effectiveness of any registration statement for up to 135
days if the offering would, in the judgment of the Board of Directors of
Grantor, require premature disclosure of any material corporate development or
material transaction involving Grantor or interfere with any previously planned
securities offering by Grantor.
b. If the Class A Common Stock is registered pursuant to the
provisions of this Section, Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares of Class A
Common Stock covered thereby in such numbers as Grantee may from time to time
reasonably request and (ii) if any event shall occur as a result of which it
becomes necessary to amend or supplement any registration statement or
prospectus, to prepare and file under the applicable securities laws such
amendments and supplements as may be necessary to keep available for at least 90
days a prospectus covering the Class A Common Stock meeting the requirements of
such securities laws, and to furnish Grantee such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. Grantor shall bear the cost of the registration,
including, but not limited to, all registration and filing fees, printing
expenses, and fees and disbursements of counsel and accountants for Grantor,
except that Grantee shall pay the fees and disbursements of its counsel, and the
underwriting fees and selling commissions applicable to the Shares of Class A
Common Stock sold by Grantee.
c. Grantor shall indemnify and hold harmless (i) Grantee, its
affiliates and its officers and directors and each person who controls Grantee
within the meaning of the Securities Act or Exchange Act and (ii) each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act or the Exchange Act (collectively, the "Underwriters") ((i)
and (ii) being referred to as "Indemnified Parties") against any losses, claims,
damages, liabilities or expenses, to which the Indemnified Parties may become
subject, insofar as such
<PAGE>
Option on TVG Stock
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in any
registration statement or prospectus filed pursuant to this section, 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
therein not misleading; provided, however, that Grantor will not be liable in
any such case to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any such documents in reliance
upon and in conformity with written information furnished to Grantor by the
Indemnified Parties expressly for use or incorporation by reference therein.
d. Grantee and the Underwriters shall indemnify and hold harmless
Grantor, its affiliates and its officers and directors and each person who
controls Grantee within the meaning of the Securities Act or Exchange Act
against any losses, claims, damages, liabilities or expenses to which Grantor,
its affiliates and its officers and directors may become subject, insofar as
such losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement of any material
fact contained or incorporated by reference in any registration statement filed
pursuant to this section, 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 therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Grantor by Grantee or the
Underwriters, as applicable, specifically for use or incorporation by reference
therein.
13. Expenses. Each party hereto shall pay its own expenses incurred in
--------
connection
<PAGE>
Option on TVG Stock
with this Agreement, except as otherwise specifically provided herein.
14. Specific Performance. Grantor acknowledges that if Grantor fails to
--------------------
perform any of its obligations under this Agreement immediate and irreparable
harm or injury would be caused to Grantee for which money damages would not be
an adequate remedy. In such event, Grantor agrees that Grantee shall have the
right, in addition to any other rights it may have, to specific performance of
this Agreement.
15. Notice. All notices, requests, demands and other communications
------
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such transmission
has been received, to the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
If to Grantor: TV Guide, Inc.
7140 South Lewis Avenue
Tulsa, OK 74136-5422
Attention: Peter Boylan
Facsimile: (918) 488-4928
With a copy to: Baker & Botts, L.L.P.
599 Lexington Avenue
New York, NY 10022-6030
Attention: Elizabeth Markowski, Esq.
Facsimile: (212) 705-5125
If to Grantee: Gemstar Holding Corp.
135 North Los Robles Avenue, Suite 800
Pasadena, CA 91101
Attention: General Counsel
Facsimile: (626) 792-0257
With a copy to: O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, CA 92660
<PAGE>
Option on TVG Stock
Attention: David A. Krinsky, Esq.
Facsimile: (714) 669-6994
16. Parties in Interest. This Agreement shall inure to the benefit of and
-------------------
be binding upon the parties named herein and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any person other than Grantor or Grantee, or their successors or assigns,
any rights or remedies under or by reason of this Agreement.
17. Entire Agreement; Amendments. This Agreement, together with the Merger
----------------------------
Agreement and the other documents referred to therein, contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings, oral
or written, with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but may be changed only by an agreement in
writing signed by the party against whom any waiver, change, amendment,
modification or discharge may be sought.
18. Assignment. No party to this Agreement may assign any of its rights
----------
or obligations under this Agreement without the prior written consent of the
other party hereto, except that Grantee may assign unilaterally any or all of
its rights and obligations hereunder to (i) any of its direct or indirect wholly
owned subsidiaries, or (ii) any person in the event any federal agency objects
to the exercise of the Option, in whole or in part, on grounds relating to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; provided,
however, that no such assignment shall relieve Grantee of its obligations
hereunder if such transferee does not perform such obligations.
19. Headings. The section headings herein are for convenience only and
--------
shall not affect the construction of this Agreement.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts,
<PAGE>
Option on TVG Stock
each of which, when executed, shall be deemed to be an original and all of which
together shall constitute one and the same document.
21. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware (without regard to principles
of conflicts of law).
22. Termination. The right to exercise the Option granted pursuant to
-----------
this Agreement shall terminate at the earliest of (i) the Effective Time (as
defined in the Merger Agreement) and (ii) 120 days after the Triggering Event
(the "Termination Date"). All representations and warranties contained in this
Agreement shall survive delivery of and payment for the Shares of Class A Common
Stock.
23. Extension of Exercise Periods. The 120 day period for exercise of
-----------------------------
certain rights under Section 22 shall be extended (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods, (ii) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise, and (iii) during any period in which Grantee is precluded from
exercising such rights due to an injunction or other legal restriction, plus, in
the case of clauses (i), (ii) and (iii), for an additional period of ten
business days following the obtaining of such approvals or the expiration of
such periods.
24. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Intentionally Left Blank]
<PAGE>
Option on TVG Stock
IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement to be
duly executed and delivered on the day and year first above written.
TV GUIDE, INC. GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ PETER C. BOYLAN III By: /s/ HENRY C. YUEN
-------------------------- ------------------------------
Name: Peter C. Boylan III Name: Henry C. Yuen
Title: President Title: Chief Executive Officer
<PAGE>
EXHIBIT 99.15
RIGHTS PLAN AMENDMENT
Section 1. Certain Definitions. The definitions in Section 1 would be revised
-------------------
to read as follows:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, any entity holding Common Shares
for or pursuant to the terms of any such plan or any Exempt Person (as such term
is hereinafter defined) (provided, however, that in the event that any Exempt
Person shall after the Effective Time of the Merger become the Beneficial Owner
of any additional Common Shares of the Company (other than by an Exempt
Transaction) then such Exempt Person shall be deemed to be an "Acquiring
Person"). Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of (i) an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding, or (ii) a grant or exercise of employee
or director options granted prior to or after the Original Agreement Date by the
Company; provided, however, that if a Person shall become the Beneficial Owner
of 15% or more of the Common Shares of the Company then outstanding by reason of
an acquisition of Common Shares by the Company and shall, after such an
acquisition by the Company, become the Beneficial Owner of any additional Common
Shares of the Company (other than in an Exempt Transaction), then such Person
shall be deemed to be an "Acquiring Person". Furthermore, notwithstanding the
foregoing, the term Acquiring Person shall not include any Person who or which
as of any time becomes the Beneficial Owner of more than 15% of the Common
Shares outstanding as of such time (i) solely as the result of the acquisition
by such Person or one or more of its Affiliates or Associates of Beneficial
Ownership of additional Common Shares if such acquisition was made in the good
faith belief that such acquisition would not cause either the number of Common
Shares beneficially owned by such Person, together with its Affiliates and
Associates, to exceed 15% of the Common Shares outstanding at the time of such
acquisition or otherwise cause a Distribution Date or the adjustment provided in
Section 11(a) to occur and such good faith belief was based on the good faith
reliance on information contained in publicly filed reports or documents of the
Company which were inaccurate or out-of-date or (ii) solely as the result of the
acquisition of beneficial ownership of any Common Shares by any of such Person's
Affiliates or Associates who or which are not Controlled Related Parties of such
Person or (iii) solely as the result of any transaction or event pursuant to
which any Person who or which beneficially owns any Common Shares and was not
previously an Affiliate or Associate of such Person becomes an Affiliate or
Associate of such Person, (iv) solely as the result of the acquisition by such
Person or one or more of its Affiliates or Associates of Beneficial Ownership of
additional Common Shares if such acquisition was made in the good faith belief
that such acquisition would not cause the number of Common Shares beneficially
owned by such Person, together with its Affiliates and Associates, to exceed 15%
of the Common Shares outstanding at the time of such acquisition or otherwise
cause a Distribution Date or the adjustment provided in Section 11(a) to occur
and such good faith belief was based on the good faith reliance on inaccurate or
out-of-date information concerning the number of Common Shares beneficially
owned by any Affiliates
<PAGE>
or Associates of such Person who or which are not Controlled Related Parties of
such Person; provided, however, that in the case of any of clauses (i) through
-------- -------
(iv) (each an "Inadvertent Acquisition"), the percentage of the Common Shares
outstanding represented by the number of Common Shares beneficially owned by
such Person is reduced to 15% or less within the applicable cure period or, in
the case of an Exempt Person, such Exempt Person and its Controlled Related
Parties dispose within the applicable cure period of Beneficial Ownership of a
number of Common Shares equal in the aggregate to the number of Common Shares
Beneficial Ownership of which was acquired in the Inadvertent Acquisition. For
purposes of the immediately preceding sentence, the "applicable cure period"
shall be the period commencing on (and including) the date that such Person
becomes aware that the number of Common Shares beneficially owned by such Person
exceeds 15% of the Common Shares outstanding (or, in the case of an Exempt
Person, the date such Person first becomes aware of the Inadvertent Acquisition)
(except that if such Person has separately agreed in writing with the Company to
notify the Company once such Person becomes aware of such fact, the cure period
shall commence on (and include) the date of receipt by such Person of written
notice from the Company that the number of Common Shares beneficially owned by
such Person exceeds, as of the date such notice is given, 15% of the Common
Shares outstanding as of such date) and ending upon the Close of Business on (i)
the fifth Business Day after such date in the case of any Person described in
clause (i) of the immediately preceding sentence or (ii) the tenth Business Day
after such date in the case of any Person described in clause (ii), (iii) or
(iv) of the immediately preceding sentence; provided, however, that if such
-------- -------
reduction or disposition would require the disposition by such Person or any of
its Affiliates or Associates of any Common Shares and such Person notifies the
Company in writing that, in such Person's good faith belief, such disposition
within such period could not reasonably be accomplished without violation of
applicable law or could reasonably be accomplished only for consideration or on
terms materially disadvantageous as compared to the consideration or terms on
which such disposition could be accomplished during some longer period of time,
then such period shall be extended for such time as the directors of the Company
whose approval would be required to redeem the Rights under Section 24 shall
reasonably deem to be required in order to prevent such violation of applicable
law or shall reasonably deem to be sufficient to minimize such disadvantageous
effect (as the case may be), subject to the condition that such Person shall
during the cure period, as extended (or until such earlier time at which such
Person, together with its Affiliates and Associates, otherwise ceases to
beneficially own more than 15% of the outstanding Common Shares), diligently and
in good faith proceed to effect the required disposition as expeditiously as
reasonably practicable and comply with any arrangements regarding the voting of
a number of Common Shares beneficially owned by such Person, together with its
Affiliates and Associates, equal to the number so required to be disposed of
pending completion of such disposition as such directors of the Company shall
request (including arrangements not to vote such number of Common Shares or only
to vote such number of Common Shares in a manner approved by such directors of
the Company). For purposes of this definition, the determination of whether any
Person (other than a director of the Company, in his or her capacity as a
director of the Company) acted in "good faith" shall be conclusively determined
in good faith by those directors of the Company whose approval would be required
to redeem the Rights under Section 24.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the Original Agreement Date; provided, however,
2
<PAGE>
that (i) neither AT&T Corp. nor any of its subsidiaries shall be considered an
Affiliate or Associate of Liberty as long as (x) it is not a Controlled Related
Party of Liberty and (y) AT&T Corp. or any of its subsidiaries and Liberty have
not and do not agree to act in concert or to form a group, as such term is
defined in Section 13(d)(3) of the Exchange Act with respect to Common Shares of
the Company, (ii) no Affiliate or Associate of Liberty as of the date hereof
that is not a Controlled Related Party of Liberty shall be deemed an Affiliate
or Associate of Liberty provided that such Person and Liberty have not and do
not agree to act in concert or to form a group, as such term is defined in
Section 13(d)(3) of the Exchange Act with respect to Common Shares of the
Company and (iii) no Affiliate or Associate of News as of the date hereof that
is not a Controlled Related Party of News shall be deemed an Affiliate or
Associate of News provided that such Person and News have not and do not agree
to act in concert or to form a group, as such term is defined in Section
13(d)(3) of the Exchange Act with respect to Common Shares of the Company.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
and no Exempt Person shall be deemed the Beneficial Owner of, or to beneficially
own, any securities it has the right to acquire in any Exempt Transaction until
such securities are purchased; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act and (2)
the beneficial ownership of such security is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c) (ii) (B)) or disposing of such securities.
3
<PAGE>
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, (i) the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder and (ii) none of Henry Yuen,
Liberty or any of its Controlled Related Parties, and News or any of its
Controlled Related Parties shall, as a result of the transactions expressly
contemplated by the Merger Agreement and the exhibits thereto, be deemed to have
Beneficial Ownership of Securities with respect to which any of such other
Persons has Beneficial Ownership.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New York time,
on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean the
shares of common stock (formerly ordinary shares), par value $0.01 per share, of
the Company. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first-
mentioned Person.
(g) "Controlled Related Party" means, when used with respect to any specified
Person, each Affiliate or Associate of such Person if such Person possesses,
directly or indirectly, by or through stock ownership, agency or otherwise, or
pursuant to or in connection with an agreement, arrangement or understanding
(written or oral) with one or more other persons, the power to direct decisions
regarding the acquisition, disposition or voting by such Affiliate or Associate
of Common Shares or rights to acquire or vote Common Shares. A Person with
respect to which two Exempt Persons (other than Thomas Lau and Dynamic Core
Holdings Limited) share the power to direct such decisions shall be deemed a
Controlled Related Party of each such Exempt Person.
(h) "Distribution Date" shall have the meaning set forth in Section 3 hereof.
(i) "Effective Time of the Merger" means the closing of the Merger.
(j) "Exempt Person" means each of Thomas Lau, or such Person or Persons who
succeed to ownership of his Common Shares either by will or pursuant to
applicable statutes of descent and distribution and Dynamic Core Holdings
Limited, a British Virgin Islands corporation, for so long as such entity is
wholly owned by Thomas Lau or his successors, Liberty and its Controlled Related
Parties, and News and its Controlled Related Parties.
(k) "Exempt Transaction" shall mean (i) each of the ownership and exercise by
any Exempt Person (other than Thomas Lau and Dynamic Core Holdings Limited) of
the right to acquire, and/or the acquisition by any Exempt Person (other than
Thomas Lau and Dynamic Core Holdings Limited) of, Beneficial Ownership of Common
Shares beneficially owned by any other Exempt Person (other than Thomas Lau and
Dynamic Core Holdings Limited) or Henry Yuen,
4
<PAGE>
(ii) the acquisition by any Exempt Person (other than Thomas Lau and Dynamic
Core Holdings Limited) of Beneficial Ownership of additional Common Shares which
do not, in the aggregate, exceed the number of Common Shares transferred by
Henry Yuen before or after the Effective Time of the Merger to Persons other
than any Exempt Person (other than Thomas Lau and Dynamic Core Holdings Limited)
pursuant to a Permitted Transfer or a Fast-Track Sale (as such terms are defined
in the Stockholders Agreement, dated as of October 4, 1999, by and among the
Company, Liberty, News and Henry Yuen), (iii) the grant to or exercise by any
Exempt Person of employee or director options granted prior to or after the
Original Agreement Date by the Company, and (iv) an agreement, arrangement or
understanding solely among Exempt Persons (other than Thomas Lau and Dynamic
Core Holdings Limited) with respect to voting, holding, acquiring or disposing
of Beneficial Ownership of Common Shares.
(l) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(m) "Liberty" shall mean Liberty Media Corporation, a Delaware corporation, and
any successor (by merger, consolidation, transfer or otherwise) to all or
substantially all, of its business and assets.
(n) "Merger" shall mean the merger contemplated by that certain Agreement and
Plan of Merger dated as of October 4, 1999 by and among Gemstar International
Group Limited, a British Virgin Islands corporation, G Acquisition Subsidiary, a
Delaware corporation, and TV Guide, Inc., a Delaware corporation (the "Merger
Agreement").
(o) "News" shall mean The News Corporation Limited, a South Australia,
Australia corporation, and any successor (by merger, consolidation, transfer or
otherwise) to all, or substantially all, of its business and assets.
(p) "Person" shall mean any individual, firm, corporation, limited liability
company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock (formerly Series A Junior Participating Preference Shares), par
value $0.01 per share, of the Company having the rights and preferences set
forth in Exhibit A.
(r) "Redemption Date" shall have the meaning set forth in Section 7 hereof.
(s) "Shares Acquisition Date" shall mean the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become
such.
(r) "Subsidiary" of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
------------------------------------------------------------------
The last sentence of the first paragraph of Section 11(a)(ii) would be revised
to add the phrase "Subject to Section 24" at the beginning of such sentence. As
revised, the sentence will read as follows:
"Subject to Section 24, in the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall
5
<PAGE>
not take any action which would eliminate or diminish the benefits intended
to be afforded by the Rights."
Section 24. Exchange. The last sentence of Section 24(a) would be revised to
--------
read as follows:
"Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person, together
with all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan, or any Exempt Person (provided that
with respect to the Exempt Person, the Exempt Person is not then an
Acquiring Person))."
6
<PAGE>
EXHIBIT 99.16
AMENDMENT
AMENDMENT (this "Amendment"), made effective as of February 7, 2000, by and
among Gemstar International Group Limited, a British Virgin Islands corporation
("Gemstar"), G Acquisition Subsidiary Corp., a Delaware corporation and a
wholly-owned subsidiary of Gemstar ("Sub"), and TV Guide, Inc., a Delaware
corporation ("TV Guide"), to the Agreement and Plan of Merger, dated as of
October 4, 1999 (the "Merger Agreement"), by and among Gemstar, Sub and TV
Guide. All capitalized terms used herein which are not otherwise defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
WHEREAS, pursuant to the Merger Agreement, Gemstar has agreed to effect the
Domestication on or prior to the Closing Date; and
WHEREAS, the Merger Agreement provides that Gemstar's Certificate of
Incorporation and Bylaws following the Domestication and at the Effective Time
will be in the respective forms annexed to the Merger Agreement as Exhibit
1.7(a) and Exhibit 1.7(b); and
WHEREAS, Gemstar and TV Guide have determined that it is advisable for
Gemstar to effect the Domestication prior to the Parent Stockholders' Meeting;
and
WHEREAS, the parties are entering into this Amendment in order to set forth
their agreement with respect to the forms of Gemstar's Certificate of
Incorporation and Bylaws following the Domestication and the Effective Time and
certain other matters.
NOW THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto agree as follows:
Section 1. Governing Instruments.
--------- ----------------------
(a) Immediately following the Domestication and the Effective Time,
Gemstar's Certificate of Incorporation will be in the form set forth
as Exhibit A hereto, which shall replace in its entirety Exhibit
1.7(a) to the Merger Agreement.
(b) Immediately following the Domestication, Gemstar's Bylaws will be in
the form set forth as Exhibit B hereto.
(c) Immediately following the Effective Time, Gemstar's Bylaws will be in
the form set forth as Exhibit C hereto, which shall replace in its
entirety Exhibit 1.7(b) to the Merger Agreement.
(d) Immediately following the Domestication, the Parent Rights Agreement
will be amended and restated so as to be in the form set forth as
Exhibit D hereto (the "Amended Rights Agreement").
(e) Immediately prior to the Effective Time, the Amended Rights Agreement
will be amended as provided on Exhibit E hereto, which shall replace
in its entirety
<PAGE>
Exhibit 5.10 to the Merger Agreement.
(f) Promptly following the Effective Time, Gemstar will effect a merger of
a subsidiary of Gemstar with and into Gemstar in accordance with
Section 253 of the Delaware General Corporation Law solely for the
purpose of changing the name of Gemstar to "TV Guide International,
Inc."
Section 2. Waiver.
--------- ------
To the extent any provisions of the Merger Agreement would prohibit or
conflict with actions required to be taken in accordance with Section 1 hereof,
such provisions are hereby amended or waived to the extent necessary to permit
the taking of such actions.
Section 3. Ratification.
--------- ------------
Except as specifically set forth herein, the terms and provisions of the
Merger Agreement shall remain in full force and effect and are hereby in all
respects ratified and confirmed.
Section 4. Representations.
--------- ---------------
Each party represents and warrants to each other party that this Amendment
(1) has been duly executed by its authorized officer, and (2) in accordance with
Section 7.6 of the Merger Agreement has been approved by the affirmative vote of
a majority of the members of its entire board of directors.
Section 5. Miscellaneous.
--------- -------------
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE. This Amendment may be executed in any number of
counterparts, all of which shall be considered one and the same instrument. This
Amendment shall become effective as of the date first written above when signed
by each party and delivered to the other party. Delivery of an executed
signature page by facsimile shall be effective execution and delivery.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first
written above.
GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ Stephen A. Weiswasser
______________________________________
Name: Stephen A. Weiswasser
Title: Executive Vice President and
General Counsel
G ACQUISITION SUBSIDIARY CORP.
By: /s/ Stephen A. Weiswasser
______________________________________
Name: Stephen A. Weiswasser
Title: Assistant Secretary
TV GUIDE, INC.
By: /s/ Charles B. Ammann
______________________________________
Name: Charles B. Ammann
Title: Senior Vice President
<PAGE>
Exhibit A
<PAGE>
CERTIFICATE OF INCORPORATION
OF
GEMSTAR INTERNATIONAL GROUP LIMITED
ARTICLE I
NAME
The name of the Corporation is Gemstar International Group Limited
(the "Corporation").
ARTICLE II
REGISTERED OFFICE
The location of the registered office of the Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware. The name of the registered agent at such address is The
Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
ARTICLE IV
AUTHORIZED STOCK
The total number of shares of capital stock that the Corporation shall
have authority to issue is two billion five hundred million (2,500,000,000)
shares, divided into the following classes: two billion three hundred fifty
million (2,350,000,000) shares of Common Stock, par value $.01 per share
("Common Stock") and one hundred fifty million (150,000,000) shares of preferred
stock, par value $.01 per share ("Preferred Stock"), of which (i) 25,000,000
shares have been designated Series A Junior Participating Preferred Stock (the
"Series A Preferred Stock"), having the rights, preferences, privileges and
restrictions set forth in Article XI of this Certificate, and (ii) the balance
will be issuable in series as provided in Section B of this Article IV.
<PAGE>
SECTION A
COMMON STOCK
Each share of the Common Stock shall have the same relative rights and
shall be identical in all respects to all other shares of Common Stock.
1. Voting Rights.
-------------
Holders of Common Stock shall be entitled to one vote for each share
of such stock held on all matters presented to such stockholders. Except as may
otherwise be required by the laws of the State of Delaware and, with respect to
any series of Preferred Stock, except as may be provided in Article XI or in any
resolution or resolutions providing for the establishment of such series
pursuant to authority vested in the Board of Directors by this Certificate, the
holders of outstanding shares of Common Stock and the holders of outstanding
shares of each series of Preferred Stock, if any, entitled to vote thereon shall
vote as one class with respect to the general election of directors and with
respect to all other matters to be voted on by stockholders of the Corporation
(including, without limitation, any proposed amendment to this Certificate that
would increase the number of authorized shares of Common Stock or of any other
class or series of stock or decrease the number of authorized shares of any such
class or series of stock (but not below the number of shares thereof then
outstanding)), and no separate vote or consent of the holders of shares of
Common Stock or any such series of Preferred Stock shall be required for the
approval of any such matter.
2. Dividends.
---------
Dividends shall be payable only as and when declared by the Board of
Directors out of any assets legally available for the payment of dividends.
3. Liquidation and Dissolution.
---------------------------
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and liabilities of the Corporation and subject to the prior
payment in full of the preferential amounts to which any series of Preferred
Stock is entitled, the holders of Common Stock shall share equally, on a share
for share basis, in the assets of the Corporation remaining for distribution to
its common stockholders. Neither the consolidation or merger of the Corporation
with or into any other person or persons nor the sale, transfer or lease of all
or substantially all of the assets of the Corporation shall itself be deemed to
be a liquidation, dissolution or winding up of the Corporation within the
meaning of this paragraph 3.
SECTION B
PREFERRED STOCK
The Preferred Stock may be issued, from time to time, in one or more
series, with such powers, designations, preferences and relative, participating,
optional or other rights, and
2
<PAGE>
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in a resolution or resolutions providing for the issue of such series
adopted by the Board of Directors (a "Preferred Stock Designation"). Without
limiting the foregoing, the Board of Directors, in such Preferred Stock
Designation (a copy of which shall be filed as required by law), is also
expressly authorized to fix with respect to each series:
(i) the distinctive serial designations and the division of such
shares into series and the number of shares of a particular series,
which may be increased or decreased, but not below the number of
shares thereof then outstanding, by a certificate made, signed, filed
and recorded as required by law;
(ii) the dividend rate or amounts, if any, for the particular series,
the date or dates from which dividends on all shares of such series
shall be cumulative, if dividends on stock of the particular series
shall be cumulative, and the relative rights of priority, if any, or
participation, if any, with respect to payment of dividends on shares
of that series;
(iii) the rights of the shares of each series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment
of shares of each series;
(iv) the right, if any, of the holders of a particular series to
convert or exchange such stock into or for other classes or series of
a class of stock or indebtedness of the Corporation or another entity,
and the terms and conditions of such conversion or exchange, including
provisions for the adjustment of the conversion or exchange rate in
such events as the Board of Directors shall determine;
(v) the voting rights, if any, full or limited of the holders of a
particular series; and
(vi) the terms and conditions, if any, for the Corporation to purchase
or redeem shares of a particular series.
All shares of any one series of the Preferred Stock shall be alike in
every particular. Except to the extent otherwise provided in the resolution or
resolutions providing for the issue of any series of Preferred Stock, the
holders of shares of such series shall have no voting rights except as may be
required by the laws of the State of Delaware.
Except as may be provided by the Board of Directors in a Preferred
Stock Designation or by law, shares of any series of Preferred Stock that have
been redeemed (whether through the operation of a sinking fund or otherwise) or
purchased by the Corporation, or which, if convertible or exchangeable, have
been converted into or exchanged for shares of stock of any other class or
classes shall resume the status of authorized and unissued shares of Preferred
Stock
3
<PAGE>
without designation as to series and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock.
ARTICLE V
DIRECTORS
SECTION A
NUMBER OF DIRECTORS
The governing body of the Corporation shall be a Board of Directors.
Effective upon the filing of the Certificate of Merger of TV Guide, Inc., a
Delaware corporation ("TVG"), and G Acquisition Subsidiary Corp., a Delaware
corporation and subsidiary of the Corporation (the "Effective Time"), the Board
of Directors shall consist of twelve (12) directors. After the Effective Time,
the number of directors may be changed by the Board of Directors from time to
time by resolution adopted by at least nine of the twelve members of the Board
of Directors then authorized. At the Effective Time, six (6) directors shall be
persons who are designated by the Board of Directors of TVG prior to the
Effective Time to serve on the Board of Directors of the Corporation (the "TVG
Directors"), two of whom shall be Independent Directors (as defined in the
Corporation's By-laws as amended from time to time), and six (6) directors shall
be persons who are designated by the Board of Directors of the Corporation prior
to the Effective Time to serve on the Board of Directors of the Corporation (the
"GS Directors"), two of whom shall be Independent Directors. No series of
Preferred Stock shall be entitled to elect any additional directors, although
the terms of any series of Preferred Stock may provide that the shares of such
series are entitled to vote in elections of directors.
SECTION B
TERM OF OFFICE
The Corporation shall have three classes of directors: Class I, Class
II and Class III. Each class of directors shall consist of a number of directors
equal as nearly as practicable to one-third of the then authorized number of
members of the Board of Directors. The initial term of office of the Class I
Directors shall expire at the annual meeting of stockholders in 2003; the
initial term of office of the Class II Directors shall expire at the annual
meeting of stockholders in 2002; and the initial term of office of the Class III
Directors shall expire at the annual meeting of stockholders in 2001. At each
annual meeting of stockholders of the Corporation, the successors of that class
of directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of such election. The directors of each class will hold
office until their respective death, resignation or removal and until their
respective successors are elected and qualified. At the Effective Time, two of
the six TVG Directors will be Class I Directors, two will be Class II
4
<PAGE>
Directors and two will be Class III Directors. At the Effective Time, the
remaining two Class I Directors, two Class II Directors and two Class III
Directors will be GS Directors.
SECTION C
ELECTION AND REMOVAL OF DIRECTORS
Election of directors need not be by written ballot. Advance notice of
nominations for the election of directors, other than nominations by the Board
of Directors in accordance with the By-laws of the Corporation, shall be given
to the Corporation in the manner provided in the By-laws of the Corporation.
Directors may be removed from office with or without cause upon the affirmative
vote of the holders of at least 66 2/3% of the total voting power of the then
outstanding Voting Securities (defined below), voting together as a single class
at a meeting specifically called for such purpose. The term "Voting Securities"
shall mean the Common Stock and any series of Preferred Stock entitled to vote
with the holders of Common Stock generally upon all matters which may be
submitted to a vote of stockholders at any annual meeting or special meeting
thereof.
SECTION D
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause, and newly created directorships
resulting from any increase in the number of directors on the Board of
Directors, shall be filled as shall be specified in the By-laws. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the vacancy
occurred or to which the new directorship is apportioned, and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
SECTION E
LIMITATION ON LIABILITY AND INDEMNIFICATION
1. Limitation On Liability.
-----------------------
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or any of its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this paragraph 1 shall be prospective only and shall not
adversely affect any limitation, right or protection of a director of the
Corporation existing at the time of such repeal or modification.
5
<PAGE>
2. Indemnification.
---------------
(a) Right to Indemnification. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, limited liability
company, joint venture, trust, enterprise or nonprofit entity, including service
with respect to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys' fees) reasonably incurred by such person.
Such right of indemnification shall inure whether or not the claim asserted is
based on matters which antedate the adoption of this Section E. The Corporation
shall be required to indemnify or make advances to a person in connection with a
proceeding (or part thereof) initiated by such person (other than compulsory
counterclaims) only if the proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
(b) Prepayment of Expenses. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, provided however, that the payment of expenses incurred
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this paragraph or
otherwise.
(c) Claims. If a claim for indemnification or prepayment of expenses
under this paragraph 2 is not paid in full within 30 days after a written claim
therefor has been received by the Corporation, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or prepayment of expenses under
applicable law.
(d) Non-Exclusivity of Rights. The rights conferred on any person by
this paragraph shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of this Certificate, the
By-laws, agreement, vote of stockholders or disinterested directors or
otherwise.
(e) Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification from such other
corporation, partnership, limited liability company, joint venture, trust,
enterprise or nonprofit entity.
6
<PAGE>
3. Amendment or Repeal.
-------------------
Any repeal or modification of the foregoing provisions of this Section
E shall not adversely affect any right or protection hereunder of any person in
respect of any act of omission occurring prior to the time of such repeal or
modification.
SECTION F
AMENDMENT OF BY-LAWS
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors, by action taken by the
affirmative vote of not less than (x) prior to the Effective Time, a majority of
the Board of Directors then authorized and (y) after the Effective Time, nine of
the twelve members of the Board of Directors then authorized, is hereby
expressly authorized and empowered to adopt, amend or repeal any provision of
the By-laws of this Corporation, including any provision of the By-laws adopted
by the affirmative vote of the Corporation's stockholders.
ARTICLE VI
MEETINGS OF STOCKHOLDERS
Except as otherwise provided in the terms of any series of Preferred
Stock, no action required to be taken or which may be taken at any annual
meeting or special meeting of stockholders may be taken without a meeting, and
the power of stockholders to consent in writing, without a meeting, is
specifically denied.
ARTICLE VII
ACTIONS REQUIRING SUPERMAJORITY STOCKHOLDER VOTE
Subject to the rights of the holders of any class or series of
Preferred Stock, the affirmative vote of the holders of at least 66 2/3% of the
total voting power of the then outstanding Voting Securities (as defined in
Section C of Article V of this Certificate), voting together as a single class
at a meeting specifically called for such purpose, shall be required in order
for the Corporation to take any action to authorize:
(a) the amendment, alteration or repeal of any provision of this
Certificate or the addition or insertion of other provisions herein other than
an amendment solely for the purpose of changing the name of the Corporation;
(b) the adoption, amendment or repeal of any provision of the By-laws
of the Corporation; provided, however, that this clause (b) shall not apply to,
and no vote of the stockholders of the Corporation shall be required to
authorize, the adoption, amendment or repeal of any provision of the By-laws of
the Corporation by the Board of Directors in
7
<PAGE>
accordance with the power conferred upon it pursuant to Section F of Article V
of this Certificate;
(c) the merger or consolidation of this Corporation with or into any
other person or any binding share exchange to which this Corporation is a party,
other than a merger of a subsidiary of this Corporation with and into this
Corporation effected in accordance with Section 253 of the Delaware General
Corporation Law solely for the purpose of changing the name of this Corporation
(it being understood that this clause (c) shall not apply to any transactions
specified in that certain Agreement and Plan of Merger dated as of October 4,
1999 by and among this Corporation, G Acquisition Subsidiary Corp. and TVG, as
such agreement may be amended from time to time (the "Merger Agreement"),
including, as contemplated thereby, the issuance of shares of the Corporation's
Common Stock in connection with the merger of G Acquisition Subsidiary Corp.
with and into TVG (the "Merger"));
(d) the sale, lease, exchange or other disposition in one transaction
or a series of related transactions of all or a substantial part of the assets
of the Corporation and its subsidiaries;
(e) the dissolution, liquidation or winding up of the Corporation; or
(f) any other matter (other than the election of directors, the
adoption or amendment of any stock option, stock appreciation rights or other
stock incentive plan for the Corporation or its subsidiaries and any
transactions contemplated by the Merger Agreement including, as contemplated
thereby, the issuance of shares of the Corporation's Common Stock in connection
with the Merger) required to be submitted to stockholders for approval by the
laws of the State of Delaware or by the rules of the national securities
exchange or national securities association on which the Common Stock is listed
or quoted.
All rights at any time conferred upon the stockholders of the
Corporation pursuant to this Certificate are granted subject to the provisions
of this Article VII.
ARTICLE VIII
TERM
The term of existence of this Corporation shall be perpetual.
ARTICLE IX
STOCK NOT ASSESSABLE
The capital stock of this Corporation shall not be assessable if fully
paid. It shall be issued as fully paid, and the private property of the
stockholders shall not be liable for the debts, obligations or liabilities of
this Corporation.
8
<PAGE>
ARTICLE X
SECTION 203
The Corporation elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE XI
RIGHTS AND PREFERENCES OF
SERIES A JUNIOR PREFERRED STOCK
SECTION A
DIVIDENDS AND DISTRIBUTIONS
(1) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of the Corporation's
Common Stock, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in Common Stock, or effect a subdivision or combination or consolidation
of the outstanding Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(2) The Company shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (1) of this Section immediately after
it declares a
9
<PAGE>
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
SECTION B
VOTING RIGHTS
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein, in any other amendment to
this Certificate creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other
10
<PAGE>
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of the Corporation's
stockholders.
(3) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION C
CERTAIN RESTRICTIONS
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section A are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(2) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the
11
<PAGE>
Corporation could, under paragraph (1) of this Section C, purchase or otherwise
acquire such shares at such time and in such manner.
SECTION D
REACQUIRED SHARES
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein or as otherwise required by law.
SECTION E
LIQUIDATION, DISSOLUTION OR WINDING UP
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
12
<PAGE>
SECTION F
CONSOLIDATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION G
NO REDEMPTION
The shares of Series A Preferred Stock shall not be redeemable.
SECTION H
RANK
The Series A Preferred Stock shall rank, with respect to the payment
of dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
SECTION I
AMENDMENT OF ARTICLE
This Article shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
13
<PAGE>
ARTICLE XII
INCORPORATOR
The name and mailing address of the Incorporator is Stephen A.
Weiswasser, 135 North Los Robles Avenue, Suite 800, Pasadena, California 91101.
I, THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a corporation in pursuance of the General Corporation Law of
the State of Delaware and the acts amendatory thereof and supplemental thereto,
make and file this Certificate of Incorporation hereby declaring and certifying
that the facts herein stated are true as of February __, 2000.
_________________________________
Stephen A. Weiswasser
14
<PAGE>
Exhibit B
<PAGE>
GEMSTAR INTERNATIONAL GROUP LIMITED
A Delaware Corporation
By-laws
___________________________
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting.
---------------
An annual meeting of stockholders for the purpose of electing those
directors whose term of office expires at such meeting and of transacting such
other business as may properly come before it shall be held each year at such
date, time, and place either within or outside the State of Delaware, as may be
specified by the Board of Directors in the notice of meeting.
Section 1.2 Special Meetings.
-----------------
Except as otherwise provided in the terms of any class or series of
preferred stock or unless otherwise provided by law, special meetings of
stockholders of the Corporation, for any purpose or purposes, shall be called by
the Secretary of the Corporation promptly (i) upon the written request of the
holders of not less than a majority of the total voting power of the outstanding
Voting Securities (as hereinafter defined) of the Corporation (such written
request shall set forth the purpose or purposes for which the meeting is called,
and in case of a special meeting called for the purpose of nominating directors
of the Corporation, the information required by Section 1.9 hereof), or (ii) at
the request of a majority of the members of the entire Board. The use of the
phrase "entire Board" here refers to the total number of directors which the
Corporation would have if there were no vacancies. The Secretary of the
Corporation shall immediately notify each member of the Board of Directors of
the receipt of any such request.
<PAGE>
The term "Voting Securities" shall mean the Corporation's Common Stock, par
value $.01 per share ("Common Stock"), and any class or series of preferred
stock entitled to vote with the holders of Common Stock generally upon all
matters which may be submitted to a vote of stockholders at any annual meeting
or special meeting thereof. Special meetings of stockholders for any purpose or
purposes may be held at such time and place either within or outside the State
of Delaware as may be stated in the notice of meeting.
Section 1.3 Notice of Meetings.
-------------------
Written notice of stockholders meetings, stating the place, date, and
hour thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board or the
Chief Executive Officer (if different from the Chairman), the Secretary or an
Assistant Secretary, to each stockholder entitled to vote thereat at least ten
days but not more than sixty days before the date of the meeting, unless a
different period is prescribed by law or the Certificate of Incorporation of the
Corporation, as amended from time to time (the "Certificate").
Section 1.4 Notice of Nominations for the Election of Directors and
-------------------------------------------------------
the Proposal of Business.
- -------------------------
1.4.1 Annual Meetings of Stockholders.
Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting delivered pursuant to Section 1.3 of these By-
laws, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Corporation that has complied with all applicable
requirements of Section 1.9 hereof.
-2-
<PAGE>
1.4.2 Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting pursuant to Section 1.3 of these By-laws.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected pursuant to
the Corporation's notice of meeting (i) by or at the direction of the Board of
Directors as provided in Section 2.4 hereof or (ii) by any stockholder of the
Corporation that has complied with all applicable requirements of Section 1.9
hereof.
1.4.3 General.
(a) Only persons who are nominated in accordance with the
procedures set forth in these By-laws shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in these By-laws. Except as otherwise provided by law, the Certificate or these
By-laws, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in these By-laws and, if
any proposed nomination or business is not in compliance with these By-laws, to
declare that such defective proposal or nomination shall be disregarded.
(b) Notwithstanding the foregoing or the provisions of Section
1.9 of these By-laws, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.4 or Section 1.9 of these By-laws. Nothing in these By-
laws shall be deemed to affect any rights of stockholders to request
-3-
<PAGE>
inclusion of proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 under the Exchange Act.
Section 1.5 Quorum.
-------
Subject to the rights of the holders of any class or series of
preferred stock and except as otherwise provided by law or in the Certificate or
elsewhere in these By-laws, at any meeting of stockholders, the holders of a
majority in total voting power of the outstanding shares of stock entitled to
vote at the meeting shall be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, the holders of a majority in total voting power of the shares that are
present in person or by proxy or the chairman of the meeting may adjourn the
meeting from time to time in the manner provided in Section 1.6 of these By-laws
until a quorum shall attend.
Section 1.6 Adjournment.
------------
Any meeting of stockholders, annual or special, may adjourn from time
to time to reconvene at the same or some other place, and notice need not be
given of any such adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting. If the meeting is adjourned in a single adjournment for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. When a quorum is once
present it is not broken by the subsequent withdrawal of any stockholder.
-4-
<PAGE>
Section 1.7 Calling of Meeting.
-------------------
The Chairman of the Board or, in the absence of the Chairman, the
Chief Executive Officer (if different from the Chairman) or, in the absence of
the Chief Executive Officer, the designee of the Chairman, shall call to order
meetings of stockholders and shall act as chairman of such meetings. The
Secretary shall act as secretary of all meetings of stockholders, but, in the
absence of the Secretary, the chairman of the meeting may appoint any other
person to act as secretary of the meeting.
Section 1.8 Voting.
-------
Subject to the rights of the holders of any class or series of
preferred stock and except as otherwise provided by law, the Certificate or
elsewhere in these By-laws and except for the election of directors, at any
meeting duly called and held at which a quorum is present, the affirmative vote
of a majority of the combined voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders. At any meeting duly called and held for
the election of directors at which a quorum is present, directors shall be
elected by a plurality of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
Section 1.9 Advance Notice; Nominations.
----------------------------
At an annual or special meeting of stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before a meeting, business must be: (a) specified in the
notice of meeting (or any supplement thereto) given pursuant to Section 1.3
hereof or (b) in the case of an annual meeting, (i) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or
-5-
<PAGE>
(ii) otherwise properly brought before the meeting by a stockholder of the
Corporation. For business (other than the nomination of directors) to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Corporation.
The Secretary shall immediately notify each member of the Board of Directors of
the receipt of any such notice and the contents thereof. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
Corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-laws to the contrary, no business shall be conducted at any meeting
except in accordance with the procedures set forth in these By-laws. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this By-law, and if he should so determine, he
shall so declare to the meeting and any such
-6-
<PAGE>
business not properly brought before the meeting shall not be transacted, and if
purported to be transacted shall be void.
At each annual meeting of stockholders, the stockholders shall elect
directors in accordance with the Certificate. Only persons who are nominated in
accordance with the procedures set forth in this By-law shall be eligible for
election as directors at an annual meeting or at a special meeting called for
such purpose pursuant to Section 1.3 of these By-laws. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors
pursuant to Section 2.4 hereof or by any stockholder of the Corporation entitled
to vote for the election of directors at the meeting who complies with the
notice procedures set forth in this By-law. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. The Secretary of
the Corporation shall immediately notify each member of the Board of Directors
of the receipt of any such notice and the contents thereof. To be timely, a
stockholder's notice of nomination in the case of an annual meeting or a special
meeting called for the election of directors shall be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 60
days nor more than 90 days prior to the meeting; provided, however, that in the
event that less than 70 days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, and, provided, further, that in the case of a
special meeting called at the request of a stockholder or stockholders
nominating persons for election to the Board of Directors, the notice of
nomination by the stockholder(s) requesting such
-7-
<PAGE>
meeting will be timely if received by the Corporation pursuant to Section 1.2
hereof. Such stockholder's notice shall set forth: (a) as to each person whom
the stockholder proposes to nominate for election or re-election as a director,
(i) the name, age, business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii) the class and
number of shares of the Corporation which are beneficially owned by such person,
and (iv) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act
(including without limitation such persons' written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); and
(b) as to the stockholder giving the notice (i) the name and address, as they
appear on the Corporation's books, of such stockholder and (ii) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this By-law. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by these By-laws, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. For purposes of this By-law, "public
disclosure" shall mean disclosure in a press release reported by Dow Jones News
Service, Associated Press or a comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act.
-8-
<PAGE>
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office.
--------------------------
(a) The governing body of this Corporation shall be a Board
of Directors. The number of directors constituting the entire Board shall be
such number as may be fixed by the Board of Directors from time to time but
shall be not less than three (3) nor more than twelve (12). The initial number
of directors shall be nine. A director need not be a stockholder, a citizen of
the United States or a resident of the State of Delaware.
(b) The Board of Directors shall be divided into three
classes: Class I, Class II and Class III. Each class of directors shall consist
of a number of directors equal as nearly as practicable to one-third of the then
authorized number of members of the Board of Directors. The initial term of
office of the Class I Directors shall expire at the annual meeting of
stockholders in 2003; the initial term of office of the Class II Directors shall
expire at the annual meeting of stockholders in 2002; and the initial term of
office of the Class III Directors shall expire at the annual meeting of
stockholders in 2001. At each annual meeting of stockholders of the Corporation,
the successors of that class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of such election. The
directors of each class will hold office until their respective death,
resignation or removal and until their respective successors are elected and
qualified.
Section 2.2 Resignations.
-------------
Any director of the Corporation, or any member of any committee, may
resign at any time by giving written notice to the Board of Directors and the
Chairman of the Board. Any such resignation shall take effect at the time
specified therein or, if the time be not specified
-9-
<PAGE>
therein, then upon receipt thereof. The acceptance of such resignation shall not
be necessary to make it effective unless otherwise stated therein.
Section 2.3 Removal of Directors.
---------------------
Directors may be removed from office with or without cause upon the
affirmative vote of holders of not less than 66-2/3% of the total voting power
of the then outstanding Voting Securities (as defined in Section 1.2), voting
together as a single class at a meeting specifically called for such purpose.
Section 2.4 Newly Created Directorships, Vacancies and Nominees.
----------------------------------------------------
Vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause shall be filled by the majority vote of
the remaining directors, although less than a quorum, or by a sole remaining
director or by unanimous written consent of directors. Nominees for directors
in the case of expiration of a director's term shall be made, by the majority
vote of the directors present and voting at a meeting of the Board of Directors
duly called and held at which a quorum is present, or by unanimous written
consent of the directors.
Section 2.5 Chairman of the Board.
----------------------
The Chairman of the Board of Directors shall be elected from among the
members of the Board of Directors and shall perform the duties provided in these
By-laws and such other duties as may from time to time be assigned to the
Chairman by the Board of Directors.
Section 2.6 Meetings.
---------
At the next meeting following the annual meeting of stockholders, the
Board of Directors shall meet for the purpose of the election of officers and
the transaction of such other business as may properly come before the meeting.
Regular meetings of the Board of Directors
-10-
<PAGE>
shall be held at such times, if any, as the Board of Directors shall from time
to time by resolution determine. After the place and time of regular meetings of
the Board of Directors shall have been determined and notice thereof shall have
been once given to each member of the Board of Directors, regular meetings may
be held without further notice being given.
Special meetings of the Board of Directors shall be held at such time
and place within the United States as shall be designated in the notice of the
meeting. Special meetings of the Board of Directors may be called by the
Chairman of the Board or the Chief Executive Officer (provided that the Chief
Executive Officer is a member of the Board) and shall be called by the Secretary
of the Corporation upon the written request of not less than one half of the
entire Board.
Section 2.7 Notice of Special Meetings.
---------------------------
The Secretary, or in his or her absence or failure to give such notice
any other officer of the Corporation, shall give each director notice of the
time and place of holding of special meetings of the Board of Directors. Notice
of the date, time and place of each special meeting shall be mailed by regular
mail to each director at his designated address at least six days before the
meeting; or sent by overnight courier to each director at his designated address
at least two days before the meeting (with delivery scheduled to occur no later
than the day before the meeting); or given orally by telephone or other means,
or by telegraph or telecopy, or by any other means comparable to any of the
foregoing, to each director at his designated address at least 24 hours before
the meeting. Unless otherwise stated in the notice thereof, any and all
business may be transacted at any meeting without specification of such business
in the notice.
-11-
<PAGE>
Section 2.8 Quorum and Organization of Meetings.
------------------------------------
A majority of the total number of members of the Board of Directors as
constituted from time to time shall constitute a quorum for the transaction of
business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place, and
the meeting may be held as adjourned without further notice or waiver. Except
as otherwise required by law or provided by the Certificate or these By-laws,
directors present at any meeting at which a quorum is present for the
transaction of business may by majority vote decide any question brought before
such meeting. Meetings shall be presided over by the Chairman of the Board or
in his or her absence, a chairman chosen by the directors attending the meeting.
The Board of Directors shall keep written minutes of its meetings. The
Secretary of the Corporation shall act as secretary of the meeting, but in his
or her absence the chairman of the meeting may appoint any person to act as
secretary of the meeting.
Section 2.9 Indemnification.
----------------
The Corporation shall indemnify members of the Board of Directors and
officers of the Corporation and their respective heirs, personal representatives
and successors in interest for or on account of any action performed on behalf
of the Corporation, to the fullest extent provided by the Delaware General
Corporation Law ("Delaware Law") and the Certificate, as now or hereafter in
effect.
Section 2.10 Insurance.
----------
The Corporation may, but shall not be required to, purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, member,
-12-
<PAGE>
employee, fiduciary or agent of another enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power or the obligation to indemnify such person against such
liability under the provisions of the Certificate.
Section 2.11 Establishing Committees.
------------------------
The Board of Directors may designate one or more Committees, each
Committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any Committee, who may replace any absent or disqualified member at any meeting
of the Committee. Any such Committee, to the extent provided in the resolution,
shall, have and may exercise, to the extent permitted by Delaware Law, the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such Committee shall have the power
or authority to: (i) approve or adopt, or recommend to the stockholders, any
action or matter required to be submitted to the Stockholders for approval,
(ii) adopt, amend or repeal any By-Law or (iii) take any action that it is not
permitted to take pursuant to Delaware Law. Such Committee or Committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.
Such committees shall serve at the pleasure of the Board of Directors;
keep minutes of their meetings. The Board of Directors at any time may remove,
with or without cause, any members of any such other committee and may, with or
without cause, disband any such other committee.
-13-
<PAGE>
Section 2.12 Committees Generally.
---------------------
Each Committee shall fix its own rules of procedure, and shall meet
where and as provided by such rules or by resolution of the Board of Directors.
Except as otherwise provided by law, the presence of a majority of the then
appointed members of a Committee shall constitute a quorum for the transaction
of business by that Committee, and in every case where a quorum is present the
affirmative vote of a majority of the members of the Committee present shall be
the act of the Committee. Each Committee shall keep minutes of its proceedings,
and actions taken by a Committee shall be reported to the Board of Directors.
In the event any person shall cease to be a director of the Corporation, such
person shall simultaneously therewith cease to be a member of any Committee
appointed by the Board of Directors.
Section 2.13 Directors' Compensation.
------------------------
Directors shall receive such compensation for attendance at any
meetings of the Board and any expenses incidental to the performance of their
duties, as the Board of Directors shall determine by resolution. Such
compensation may be in addition to any compensation received by the members of
the Board of Directors in any other capacity.
Section 2.14 Action Without Meeting.
-----------------------
Nothing contained in these By-laws shall be deemed to restrict the
power of members of the Board of Directors or any committee designated by the
Board to take any action required or permitted to be taken by them without a
meeting.
Section 2.15 Telephone Meetings.
-------------------
Nothing contained in these By-laws shall be deemed to restrict the
power of members of the Board of Directors, or any committee designated by the
Board of Directors, to participate in a meeting of the Board of Directors, or
committee, by means of conference
-14-
<PAGE>
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers.
-------------------
The officers of the Corporation shall be a Chairman of the Board, a
Chief Executive Officer, a President, a Chief Financial Officer, a General
Counsel, who may be an Executive Vice President, one or more Vice Presidents,
and a Secretary, each of whom shall be elected by the Board of Directors, and
such other officers, including a Treasurer and a Controller, as may from time to
time be determined by the Board of Directors and elected or appointed by the
Board of Directors. A person may hold more than one of the foregoing offices.
The term of office of all officers shall be until their respective successors
have been elected and qualified or their earlier death, resignation or removal.
Section 3.2 Powers and Duties of Officers.
------------------------------
The officers of the Corporation shall have the authority and shall
exercise the powers and perform the duties specified below, and as may be
additionally specified by the Board of Directors or these By-laws (and in all
cases where the duties of any officer are not prescribed by the By-laws or the
Board of Directors, such officer shall follow the orders and instructions of the
Chief Executive Officer), except that in any event each officer shall exercise
such powers and perform such duties as may be required by law. The Board of
Directors may authorize any person or persons, in the name and on behalf of the
Corporation, to enter into or execute and deliver any and all deeds, bonds,
mortgages, contracts and other obligations or instruments, and such authority
may be general or confined to specific instances. In addition, the officers may
enter into, execute and deliver such undertakings and authorize other persons to
-15-
<PAGE>
enter into, execute and deliver such undertakings in connection with the
officers' exercise of their powers enumerated in these By-Laws.
(a) Chairman of the Board. The Chairman of the Board shall preside
---------------------
at all meetings of the stockholders and the Board of Directors of the
Corporation and shall have and may exercise all such powers and perform such
other duties as are provided in these By-laws to be exercised or performed by
the Chairman and as may be assigned to the Chairman from time to time by the
Board of Directors.
(b) Chief Executive Officer. The Chief Executive Officer shall,
-----------------------
subject to the direction and supervision of the Board of Directors, (i) have
general and active control of the Corporation's affairs and business and general
supervision of its officers, agents and employees; (ii) in the absence of the
Chairman of the Board (provided that the Chief Executive Officer does not hold
such position and is a director), preside at all meetings of the stockholders
and the Board of Directors; and (iii) perform all other duties incident to the
office of Chief Executive Officer and as from time to time may be assigned to
the Chief Executive Officer by the Board of Directors.
(c) President. The President (provided that the Chief Executive
---------
Officer does not hold such position) shall, subject to the direction and
supervision of the Board of Directors and the Chief Executive Officer, perform
all duties incident to the office of President as from time to time may be
assigned to him or her by the Board of Directors or the Chief Executive Officer.
At the request of the Chief Executive Officer or, in the event of his
disability, legal incapacity or refusal to act, at the request of the Board of
Directors, a President shall perform the duties of the Chief Executive Officer
in his capacity as an officer of the Corporation, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the
-16-
<PAGE>
Chief Executive Officer in his capacity as an officer of the Corporation. The
President (if other than the Chief Executive Officer) shall report to the Chief
Executive Officer of the Corporation.
(d) Executive Vice President; General Counsel. The Executive Vice
-----------------------------------------
President and General Counsel shall be responsible for the legal affairs of the
Corporation and shall have such additional powers and perform such additional
duties as may be assigned to him or her by the Chief Executive Officer or by the
Board of Directors.
(e) Vice President. The Vice President, if any (or if there is more
--------------
than one, then each Vice President), shall assist the Chief Executive Officer
and the President (if other than the Chief Executive Officer) and shall perform
such duties as may be assigned to the Vice President by the Chief Executive
Officer or by the Board of Directors. Assistant vice presidents, if any, shall
have the powers and perform the duties as may be assigned to them by the Chief
Executive Officer or by the Board of Directors.
(f) Chief Financial Officer; Treasurer. The Chief Financial Officer
----------------------------------
or, in the absence of a Chief Financial Officer, the Treasurer shall: (i) be the
principal financial officer of the Corporation and have the care and custody of
all funds, securities, evidences of indebtedness and other personal property of
the Corporation and deposit the same in accordance with the instructions of the
Board of Directors; (ii) unless assigned to the Controller, receive and give
receipts and acquittance for moneys paid in on account of the Corporation, and
pay out of the funds on hand all bills, payrolls and other debts of the
Corporation of whatever nature upon maturity; (iii) unless there is a
Controller, be the principal accounting officer of the Corporation and as such
prescribe and maintain the methods and systems of accounting to be followed,
keep complete books and records of account, prepare and file all local, state
and federal tax returns, prescribe and maintain an adequate system of internal
audit and prepare and furnish to the Chief
-17-
<PAGE>
Executive Officer, and the Board of Directors statements of account showing the
financial position of the Corporation and the results of its operations; (iv)
upon request of the Board of Directors or the Audit Committee, make such reports
to it as may be required at any time; and (v) perform all other duties incident
to such office and such other duties as from time to time may be assigned to the
Chief Financial Officer by the Board of Directors or the Chief Executive
Officer. The Chief Financial Officer and the Treasurer shall report to the Chief
Executive Officer. Assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the Chief Financial Officer or Treasurer.
If there is no Chief Financial Officer or Treasurer, these duties shall be
performed by the Secretary or the Chief Executive Officer or other person
appointed by the Board of Directors.
(g) Secretary. The Secretary shall: (i) keep the minutes of the
---------
proceedings of the stockholders, the Board of Directors and any committees of
the Board of Directors, which shall at all reasonable times be open to the
examination of any director; (ii) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (iii) be
custodian of the corporate records, which shall at all reasonable times be open
to the examination of any director, and of the seal of the Corporation; (iv)
keep at the Corporation's registered office or principal place of business a
record containing the names and addresses of all stockholders and the number and
class of shares held by each, unless such a record shall be kept at the office
of the Corporation's transfer agent or registrar; (v) have general charge of the
stock books of the Corporation, unless the Corporation has a transfer agent; and
(vi) in general, perform all other duties incident to the office of Secretary,
including certifying the record of proceedings of the meetings of the
stockholders or of the Board of Directors or resolutions adopted at such
meetings, signing or attesting certificates, statements or reports required to
be
-18-
<PAGE>
filed with governmental bodies or officials, signing acknowledgments of
instruments, and performing such other duties as from time to time may be
assigned to the Secretary by the Board of Directors, the Chief Executive Officer
or any President and Chief Operating Officer. The Secretary shall report to the
Chief Executive Officer. Assistant secretaries, if any, shall have the same
duties and powers, subject to supervision by the Secretary.
Section 3.3 Resignations; Removals.
-----------------------
(a) Any officer of the Corporation may resign at any time,
subject to any rights or obligations under any then existing contracts between
such officer and the Corporation, by giving written notice to the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
Secretary of the Corporation. Any such resignation shall take effect at the time
specified therein or, if the time be not specified therein, then upon receipt
thereof. The acceptance of such resignation shall not be necessary to make it
effective unless otherwise stated therein.
(b) The Board of Directors, by a vote of not less than a
majority of the Directors at a meeting of Directors where a quorum of the entire
Board is present or by unanimous written consent, at any time, may, to the
extent permitted by law, remove with or without cause from office or terminate
the employment of any officer, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
(c) Any vacancy in the office of any officer through death,
resignation, removal, disqualification, or other cause may be filled at any time
by the Board of Directors or, if such officer was appointed by the Chief
Executive Officer and is not a President, the Chief Financial Officer or the
Secretary, then by the Chief Executive Officer.
-19-
<PAGE>
Section 3.4 Proxies.
--------
Unless otherwise provided in the Certificate or directed by the Board
of Directors, the Chairman of the Board, the Chief Executive Officer (if
different from the Chairman) or their respective designees, shall have full
power and authority on behalf of the Corporation to attend and to vote upon all
matters and resolutions at any meeting of stockholders of any corporation in
which this Corporation may hold stock, and may exercise on behalf of this
Corporation any and all of the rights and powers incident to the ownership of
such stock at any such meeting, whether regular or special, and at all
adjournments thereof, and shall have power and authority to execute and deliver
proxies and consents on behalf of this Corporation in connection with the
exercise by this Corporation of the rights and powers incident to the ownership
of such stock, with full power of substitution or revocation.
ARTICLE IV
CAPITAL STOCK
Section 4.1 Stock Certificates.
-------------------
Each stockholder of the Corporation shall be entitled to a certificate
certifying the class and number of shares represented thereby and in such form,
not inconsistent with Delaware Law or the Certificate, as the Board of Directors
may from time to time prescribe.
The certificates of stock shall be signed by the Chairman of the
Board, the Chief Executive Officer (if different from the Chairman), any Vice
President (including an Executive Vice President) or and by the Secretary or the
Chief Financial Officer, and sealed with the seal of the Corporation. Such seal
may be a facsimile, engraved or printed. Where any certificate is manually
signed by a transfer agent or by a registrar, the signatures of any officers
upon such certificate may be facsimiles, engraved or printed. In case any
officer, transfer agent or registrar
-20-
<PAGE>
who has signed or whose facsimile signature has been placed upon any certificate
shall have ceased to be such before the certificate is issued, it may be issued
by the Corporation with the same effect as if such officer, transfer agent or
registrar had not ceased to be such at the time of its issue.
Section 4.2 Fractional Shares.
------------------
The Corporation may, but shall not be required to, issue certificates
for fractions of a share where necessary to effect authorized transactions, or
the Corporation may pay in cash the fair value of fractions of a share as of the
time when those entitled to receive such fractions are determined, or it may
issue scrip in registered or bearer form over the manual or facsimile signature
of an officer of the Corporation or of its agent, exchangeable as therein
provided for full shares, but such scrip shall not entitle the holder to any
rights of a Stockholder except as therein provided.
Section 4.3 Transfer of Shares.
-------------------
(a) Shares of the capital stock of the Corporation may be
transferred on the books of the Corporation only by the holder of such shares or
by his duly authorized attorney, upon the surrender to the Corporation or its
transfer agent of the certificate representing such stock properly endorsed.
(b) The person in whose name shares of stock stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes, and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by Delaware Law.
-21-
<PAGE>
(c) Subject to any limitations contained in the Certificate
or under applicable law, registered shares in the Corporation may be transferred
by a written instrument of transfer signed by the transferor and containing the
name and address of the transferee, but in the absence of such written
instrument of transfer, the directors may accept such evidence of a transfer of
shares as they consider appropriate.
Section 4.4 Lost Certificates.
------------------
The Board of Directors or any transfer agent of the Corporation may
direct a new certificate or certificates representing stock of the Corporation
to be issued in place of any certificate or certificates theretofore issued by
the Corporation, alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall direct to indemnify the
Corporation against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed or
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.
Section 4.5 Transfer Agent and Registrar.
-----------------------------
The Board of Directors may appoint one or more transfer agents and one
or more registrars and may require all certificates for shares to bear the
manual or facsimile signature or signatures of any of them.
-22-
<PAGE>
Section 4.6 Regulations.
------------
The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation and replacement of certificates representing stock of
the Corporation.
ARTICLE V
BOOKS AND RECORDS
Section 5.1 Location.
---------
The books and records of the Corporation may be kept at such place or
places as the Board of Directors or the respective officers in charge thereof
may from time to time determine. The record books containing the names and
addresses of all Stockholders, the number and class of shares of stock held by
each and the dates when they respectively became the owners of record thereof
shall be kept by the Secretary as prescribed in the By-Laws or by such officer
or agent as shall be designated by the Board of Directors.
Section 5.2 Addresses of Stockholders.
--------------------------
Notices of meetings and all other corporate notices may be delivered
personally or by mail, telegram, facsimile transmission or other electronic
means, to the extent permitted by Delaware Law, addressed to each Stockholder at
the Stockholder's address as it appears on the records of the Corporation. Any
notice given by telegram, cable, facsimile transmission or other electronic
means shall be deemed to have been given when it shall have been transmitted and
any notice given by mail shall be deemed to have been given when it shall have
been deposited in the United States mail with postage thereon prepaid
Section 5.3 Fixing Date for Determination of Stockholders of Record.
--------------------------------------------------------
(a) In order that the Corporation may determine the
Stockholders entitled to notice of or to vote at any meeting of Stockholders or
any adjournment thereof, the
-23-
<PAGE>
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors and which record date shall not be more than 60 days nor less
than 10 days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining Stockholders entitled to
notice of or to vote at a meeting of Stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of Stockholders of record entitled to
notice of or to vote at a meeting of Stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the
Stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the Stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action not contemplated by paragraph (a) of this Section 3, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted and which
record date shall be not more than 60 days prior to such action. If no record
date is fixed, the record date for determining Stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Offices.
--------
The Corporation shall maintain a registered office in the State of
Delaware as required by law. The Corporation may also have offices in such other
places, either within or
-24-
<PAGE>
outside the State of Delaware, as the Board of Directors may from time to time
designate or as the business of the Corporation may require.
Section 6.2 Corporate Seal.
---------------
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal" and
"Delaware".
Section 6.3 Fiscal Year.
------------
The fiscal year of the Corporation shall end on March 31 of each
calendar year.
Section 6.4 Notices and Waivers Thereof.
----------------------------
Whenever any notice whatever is required by law, the Certificate or
these By-laws to be given to any stockholder, director or officer, such notice,
except as otherwise provided by law, may be given personally or by mail,
telegram, cable or facsimile transmission, addressed to such address as appears
on the books of the Corporation. Any notice given by telegram, cable or
facsimile transmission shall be deemed to have been given when it shall have
been transmitted and any notice given by mail shall be deemed to have been given
when it shall have been deposited in the United States mail with postage thereon
prepaid.
Whenever any notice is required to be given by law, the Certificate,
or these By-laws, a written waiver thereof, signed by the person entitled to
such notice, whether before or after the meeting or the time stated therein,
shall be deemed equivalent in all respects to such notice to the full extent
permitted by law.
Section 6.5 Amendments.
-----------
In furtherance and not in limitation of the powers conferred by
Delaware Law, the Board of Directors, by action taken by the affirmative vote of
not less than a majority of the Board of Directors then authorized is hereby
expressly authorized and empowered to adopt,
-25-
<PAGE>
amend or repeal any provision of the By-laws of this Corporation, including any
provision of the By-laws adopted by the affirmative vote of the Corporation's
stockholders.
Subject to the rights of the holders of any class or series of
preferred stock, these By-laws may be adopted, amended or repealed by the
affirmative vote of the holders of not less than 66-2/3% of the total voting
power of the Voting Securities of the Corporation entitled to vote thereon;
provided, however, that this paragraph shall not apply to, and no vote of the
- -----------------
stockholders of the Corporation shall be required to authorize, the adoption,
amendment or repeal of any provision of the By-laws by the Board of Directors in
accordance with the preceding paragraph.
Notwithstanding any other provision of these By-laws, upon the filing
of the Certificate of Merger of TV Guide, Inc., a Delaware corporation ("TVG"),
and G Acquisition Subsidiary Corp., a Delaware corporation and a subsidiary of
this Corporation ("Sub"), these By-laws shall automatically (without any action
by the Board of Directors or the holders of any class or series of the
Corporation's capital stock) be amended and replaced in their entirety with the
By-laws set forth as Exhibit 1.7(b) to that certain Agreement and Plan of
Merger, dated as of October 4, 1999, among the Corporation, Sub and TVG, as the
same may be amended from time to time (as amended, the "Merger Agreement").
This paragraph of Section 6.5 may not, prior to termination of the Merger
Agreement, be amended, altered, modified or replaced without the written consent
of TVG, which consent may be given or withheld in TVG's absolute discretion.
-26-
<PAGE>
Exhibit C
<PAGE>
BYLAWS
TV GUIDE INTERNATIONAL, INC.
(formerly known as Gemstar International Group Limited)
A Delaware Corporation
By-laws
----------------
ARTICLE I
Stockholders
Section 1.1 Annual Meeting.
An annual meeting of stockholders for the purpose of electing those
directors whose term of office expires at such meeting and of transacting such
other business as may properly come before it shall be held each year at such
date, time, and place in the United States, either within or without the State
of Delaware, as may be specified by the Board of Directors in the notice of
meeting.
Section 1.2 Special Meetings.
Except as otherwise provided in the terms of any class or series of
preferred stock or unless otherwise provided by law, special meetings of
stockholders of the Corporation, for any purpose or purposes, shall be called
by the Secretary of the Corporation promptly (i) upon the written request of
the holders of not less than a majority of the total voting power of the
outstanding Voting Securities (as hereinafter defined) of the Corporation (such
written request shall set forth the purpose or purposes for which the meeting
is called, and in case of a special meeting called for the purpose of
nominating directors of the Corporation, the information required by Section
1.9 hereof), or (ii) at the request of six of the twelve members of the Board
of Directors then authorized. The Secretary of the Corporation shall
immediately notify each member of the Board of Directors of the receipt of any
such request. The term "Voting Securities" shall mean the Corporation's Common
Stock, par value $.01 per share ("Common Stock"), and any class or series of
preferred stock entitled to vote with the holders of Common Stock generally
upon all matters which may be submitted to a vote of stockholders at any annual
meeting or special meeting thereof. Special meetings of stockholders for any
purpose or purposes may be held at such time and place in the United States
either within or without the State of Delaware as may be stated in the notice
of meeting.
Section 1.3 Notice of Meetings.
Written notice of stockholders meetings, stating the place, date, and hour
thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board, the
Chief Executive Officer (if different from the Chairman), any President and
COO, any Vice President, the Secretary, or an Assistant Secretary, to each
stockholder entitled to vote there at least ten days but not more than sixty
days before the date of the meeting, unless a different period is prescribed by
law or the Certificate of Incorporation of the Corporation, as amended from
time to time (the "Certificate").
Section 1.4 Notice of Nominations for the Election of Directors and the
Proposal of Business.
1.4.1 Annual Meetings of Stockholders.
Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to
C-1
<PAGE>
the Corporation's notice of meeting delivered pursuant to Section 1.3 of these
By-laws, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Corporation that has complied with all applicable
requirements of Section 1.9 hereof.
1.4.2 Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of stockholders as
shall have been brought before the meeting pursuant to the Corporation's notice
of meeting pursuant to Section 1.3 of these By-laws. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the Corporation's
notice of meeting (a) by or at the direction of the Board of Directors as
provided in Section 2.4 hereof or (b) by any stockholder of the Corporation that
has complied with all applicable requirements of Section 1.9 hereof.
1.4.3 General.
(a) Only persons who are nominated in accordance with the procedures set
forth in these By-laws shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in these
By-laws. Except as otherwise provided by law, the Certificate or these By-laws,
the chairman of the meeting shall have the power and duty to determine whether
a nomination or any business proposed to be brought before the meeting was made
in accordance with the procedures set forth in these By-laws and, if any
proposed nomination or business is not in compliance with these By-laws, to
declare that such defective proposal or nomination shall be disregarded.
(b) Notwithstanding the foregoing or the provisions of Section 1.9 of these
By-laws, a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder with respect to the matters set forth in this Section
1.4 or Section 1.9 of these By-laws. Nothing in these By-laws shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 1.5 Quorum.
Subject to the rights of the holders of any class or series of preferred
stock and except as otherwise provided by law or in the Certificate or
elsewhere in these By-laws, at any meeting of stockholders, the holders of a
majority in total voting power of the outstanding shares of stock entitled to
vote at the meeting shall be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, the holders of a majority in total voting power of the shares that are
present in person or by proxy or the chairman of the meeting may adjourn the
meeting from time to time in the manner provided in Section 1.6 of these By-
laws until a quorum shall attend.
Section 1.6 Adjournment.
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting. If the meeting is adjourned in a single adjournment for more
than thirty days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.7 Calling of Meeting.
The Chairman of the Board or, in the absence of the Chairman, the Chief
Executive Officer (if different from the Chairman) or, in the absence of the
Chief Executive Officer, the designee of the Chairman (provided
C-2
<PAGE>
such designee is a member of the Office of the Chief Executive or in their
absence, a Vice President), shall call to order meetings of stockholders and
shall act as chairman of such meetings. The Board of Directors or, if the Board
of Directors fails to act, the stockholders, may appoint any stockholder,
director, or officer of the Corporation to act as chairman of any meeting in
the absence of all of the foregoing officers.
The Secretary shall act as secretary of all meetings of stockholders, but,
in the absence of the Secretary, the chairman of the meeting may appoint any
other person to act as secretary of the meeting.
Section 1.8 Voting.
Subject to the rights of the holders of any class or series of preferred
stock and except as otherwise provided by law, the Certificate or elsewhere in
these By-laws and except for the election of directors, at any meeting duly
called and held at which a quorum is present, the affirmative vote of a
majority of the combined voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders. At any meeting duly called and held for
the election of directors at which a quorum is present, directors shall be
elected by a plurality of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
Section 1.9 Advance Notice; Nominations.
At an annual or special meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before a meeting, business must be: (a) specified in the
notice of meeting (or any supplement thereto) given pursuant to Section 1.3
hereof or (b) in the case of an annual meeting, (i) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (ii)
otherwise properly brought before the meeting by a stockholder of the
Corporation. For business (other than the nomination of directors) to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. The Secretary shall immediately notify each member of the Board of
Directors of the receipt of any such notice and the contents thereof. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (iii) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at
any meeting except in accordance with the procedures set forth in these By-
laws. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this By-law, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted, and if purported
to be transacted shall be void.
At each annual meeting of stockholders, the stockholders shall elect
directors in accordance with the Certificate. Only persons who are nominated in
accordance with the procedures set forth in this By-law shall be eligible for
election as directors at an annual meeting or at a special meeting called for
such purpose pursuant to Section 1.3 of these By-laws. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors
pursuant to Section 2.4 hereof or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this By-law. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing
C-3
<PAGE>
to the Secretary of the Corporation. The Secretary of the Corporation shall
immediately notify each member of the Board of Directors of the receipt of any
such notice and the contents thereof. To be timely, a stockholder's notice of
nomination in the case of an annual meeting or a special meeting called for the
election of directors shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made, and, provided, further, that in the case of a
special meeting called at the request of a stockholder or stockholders
nominating persons for election to the Board of Directors, the notice of
nomination by the stockholder(s) requesting such meeting will be timely if
received by the Corporation pursuant to Section 1.2 hereof. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including
without limitation such persons' written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in this By-law. The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by these By-laws, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. For purposes of this By-law, "public
disclosure" shall mean disclosure in a press release reported by Dow Jones News
Service, Associated Press or a comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.
ARTICLE II
Board of Directors
Section 2.1 Number and Term of Office.
(a) The governing body of this Corporation shall be a Board of Directors.
The Board of Directors shall be comprised of twelve (12) members, at least four
of whom shall be "Independent Directors". For purposes of these By-laws, the
term "Independent Director" means a person other than an officer or employee of
the Corporation or its subsidiaries or any other individual having a
relationship which, in the opinion of the GS Director Committee (as defined in
Section 2.11(e)) in the case of a GS Independent Director, and in the opinion
of the TVG Director Committee (as defined in Section 2.11(d)) in the case of a
TVG Independent Director, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director (provided that in
the event a designated Independent Director does not qualify under applicable
securities exchange or securities association listing standards as an
"independent director," then a new Independent Director shall be designated
pursuant to the terms hereof to replace such director). The Board of Directors,
by resolution adopted by the affirmative vote of at least nine of the twelve
members of the Board of Directors then authorized, may increase or decrease the
number of directors. Directors need not be stockholders of the Corporation.
Effective with the filing of the Certificate of Merger of TV Guide, Inc.
("TVG") and G Acquisition Subsidiary Corp., a subsidiary of the Corporation
(the "Effective Time"), the Board of Directors
C-4
<PAGE>
shall consist of six (6) directors who shall be persons designated by the Board
of Directors of TVG prior to the Effective Time to serve on the Board of
Directors of the Corporation (such directors, together with any person
subsequently elected or appointed to the directorship previously held by any
such director and any successor thereto in accordance with these By-laws, being
herein referred to as the "TVG Directors"), two of whom shall be Independent
Directors, and six (6) directors designated by the Board of Directors of the
Corporation prior to the Effective Time (such directors, together with any
person subsequently elected or appointed to the directorship previously held by
any such director and any successor thereto in accordance with these By-laws,
being herein referred to as the "GS Directors"), two of whom shall be
Independent Directors. Two of the TVG Directors who qualify as Independent
Directors shall be designated the TVG Independent Directors (which term shall
include any person subsequently elected or appointed to the directorship
previously held by any such TVG Independent Director and any successor thereto
who qualifies as an Independent Director). Two of the GS Directors who qualify
as Independent Directors shall be designated the GS Independent Directors
(which term shall include any person subsequently elected or appointed to the
directorship previously held by any such GS Independent Director and any
successor thereto who qualifies as an Independent Director). No class or series
of preferred stock shall be entitled to elect any additional directors,
although the terms of any class or series of preferred stock may provide that
the shares of such class or series are entitled to vote in elections of
directors.
(b) The Board of Directors shall be divided into three classes: Class I,
Class II and Class III. Each class of directors shall consist of a number of
directors equal as nearly as practicable to one-third of the then authorized
number of members of the Board of Directors. The initial term of office of the
Class I Directors shall expire at the annual meeting of stockholders in 2003;
the initial term of office of the Class II Directors shall expire at the annual
meeting of stockholders in 2002; and the initial term of office of the Class
III Directors shall expire at the annual meeting of stockholders in 2001. At
each annual meeting of stockholders of the Corporation, the successors of that
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of such election. The directors of each class
will hold office until their respective death, resignation or removal and until
their respective successors are elected and qualified. At the Effective Time,
two of the six TVG Directors will be Class I Directors, two will be Class II
Directors and two will be Class III Directors. At the Effective Time, the
remaining two Class I Directors, two Class II Directors and two Class III
Directors will be GS Directors. The class into which each director shall
initially be placed shall, in the case of the TVG Directors, be determined by
the Board of Directors of TVG prior to the Effective Time and shall, in the
case of the GS Directors, be determined by the Board of Directors of the
Corporation prior to the Effective Time.
Section 2.2 Resignations.
Any director of the Corporation, or any member of any committee, may resign
at any time by giving written notice to the Board of Directors and the Chairman
of the Board. Any such resignation shall take effect at the time specified
therein or, if the time be not specified therein, then upon receipt thereof.
The acceptance of such resignation shall not be necessary to make it effective
unless otherwise stated therein.
Section 2.3 Removal of Directors.
Directors may be removed from office with or without cause upon the
affirmative vote of holders of not less than 66 2/3% of the total voting power
of the then outstanding Voting Securities (as defined in Section 1.2), voting
together as a single class at a meeting specifically called for such purpose.
Section 2.4 Newly Created Directorships, Vacancies and Nominees.
Vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause shall be filled, and nominees for
directors in the case of expiration of a director's term shall be made, by the
majority vote of the directors present and voting at a meeting of the Board of
Directors duly called and held at which a quorum is present, or by unanimous
written consent of the directors; provided, however, that until the later of
the expiration of the Specified Period (as defined in Section 2.5 of these By-
laws) and the fifth anniversary of the Effective Time, if such vacancy resulted
from the death, resignation, removal,
C-5
<PAGE>
disqualification or other cause, or if the directorship expiring is that, of
(i) a TVG Director, then the power to fill such vacancy or make such nomination
shall be vested in the TVG Director Committee, or (ii) a GS Director, then the
power to fill such vacancy or make such nomination shall be vested in the GS
Director Committee. Newly created directorships resulting from any increase in
the number of directors on the Board of Directors, shall be filled solely by
the affirmative vote of not less than nine of the twelve members of the Board
of Directors then authorized. Any director appointed in accordance with either
of the two preceding sentences shall hold office for the remainder of the full
term of the class of directors in which the vacancy occurred or to which the
new directorship is apportioned, and until such director's successor shall have
been elected and qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
Section 2.5 Chairman of the Board.
The Chairman of the Board of Directors shall be elected from among the
members of the Board of Directors and shall perform the duties provided in
these By-laws and such other duties as may from time to time be assigned to the
Chairman by the Board of Directors. As of the Effective Time and during the
Specified Period (as defined below) the Chairman of the Board shall be
appointed by the GS Director Committee, but shall be Henry Yuen so long as he
is a GS Director. Upon the expiration of the Specified Period, the person who
immediately prior thereto was Chairman of the Board shall thereupon cease to be
Chairman of the Board, and from and after such time until (but not including)
the third annual Board of Directors' meeting following (i) the expiration of
the Specified Period or, if later, (ii) the fifth anniversary of the Effective
Time, the Chairman of the Board shall be elected by majority vote or unanimous
written consent of the TVG Directors. Following the expiration of the last of
the Specified Period and the period referred to in the immediately preceding
sentence (such periods, collectively, the "Specified Chairman Selection
Periods"), the directors shall select one of their members to be Chairman of
the Board of Directors. The term "Specified Period" as used in these By-laws
means the period beginning on the Effective Date and ending on the first to
occur of (i) the fifth anniversary of the Effective Time and (ii) such date as
Henry Yuen ceases to be Chief Executive Officer of the Corporation.
Section 2.6 Meetings.
The annual meeting of the Board of Directors, for the election of officers
and the transaction of such other business as may come before the meeting, shall
be held without notice at the same place as, and immediately following, the
annual meeting of the stockholders. Regular meetings of the Board of Directors
(including such annual meeting) shall be held not less frequently than
quarterly, at 10:00 a.m. local time on the last business day of each calendar
quarter, at the executive offices of the Corporation or at such other time and
place as shall be determined from time to time by the Board of Directors. Notice
of each regular meeting shall be furnished in writing to each member of the
Board of Directors not less than five business days in advance of said meeting,
unless such notice requirement is waived in writing by each member.
Special meetings of the Board of Directors shall be held at such time and
place within the United States as shall be designated in the notice of the
meeting. Special meetings of the Board of Directors may be called by the
Chairman of the Board and shall be called by the Secretary of the Corporation
upon the written request of not less than six of the twelve members of the
Board of Directors then authorized.
Section 2.7 Notice of Special Meetings.
The Secretary, or in his or her absence or failure to give such notice any
other officer of the Corporation, shall give each director notice of the time
and place of holding of special meetings of the Board of Directors by overnight
courier, or by telegram, cable, facsimile transmission, or personal service at
least three business days before the meeting unless such notice requirement is
waived in writing by each member. Unless otherwise stated in the notice
thereof, any and all business may be transacted at any meeting without
specification of such business in the notice.
C-6
<PAGE>
Section 2.8 Quorum and Organization of Meetings.
Except as provided in the immediately following sentence, a majority of the
total number of members of the Board of Directors as constituted from time to
time shall constitute a quorum for the transaction of business, but, if at any
meeting of the Board of Directors (whether or not adjourned from a previous
meeting) there shall be less than a quorum present, a majority of those present
may adjourn the meeting to another time and place, and the meeting may be held
as adjourned without further notice or waiver. Notwithstanding the foregoing,
the presence of six of the twelve members of the Board of Directors then
authorized will constitute a quorum for the transaction of business at a meeting
of the Board if (i) such meeting was duly called pursuant to these By-laws and
(ii) either all of the TVG Directors or all of the GS Directors fail to attend
such meeting. Except as otherwise required by law or provided by the Certificate
or these By-laws, directors present at any meeting at which a quorum is present
for the transaction of business may by majority vote decide any question brought
before such meeting (other than any Fundamental Decision (as defined below)).
Except as otherwise required by law or provided by the Certificate or these By-
laws, in the event of a tie vote of the Board of Directors on any matter that is
presented to the Board of Directors for its approval (but excluding any matter
delegated by these By-laws or the Board of Directors to the Compensation
Committee, the Audit Committee or the Special Committee (as defined below) for
determination), the Tie-breaking Committee during the Specified Period only, and
thereafter the TVG Director Committee during the remainder of the Specified
Chairman Selection Periods (as defined in Section 2.5 of these By-laws) only,
shall have the exclusive power to approve or disapprove the specific proposal
with respect to which the vote was tied. Notwithstanding anything to the
contrary contained in this Section 2.8, if the Specified Period expires prior to
the fifth anniversary of the Effective Time solely as the result of the
termination of Henry Yuen's employment as Chief Executive Officer of the
Corporation pursuant to the terms of his employment agreement with the
Corporation because of his death or disability, then during the period from such
expiration of the Specified Period to the fifth anniversary of the Effective
Time (the "Suspension Period"), no committee of directors will have the power to
approve or disapprove any proposal with respect to which the directors' votes
are tied. The power of the Tie-breaking Committee or the TVG Director Committee,
as applicable, to resolve a tie vote as described in this By-law shall not in
any event apply to any matter listed on Schedule I to these By-laws (each, a
"Fundamental Board Decision") or to any matter requiring the approval of
stockholders by a supermajority vote as provided in the Certificate (each, a
"Fundamental Stockholder Decision" and, together with the Fundamental Board
Decisions, the "Fundamental Decisions"). No action may be taken by the
Corporation or any of its subsidiaries with respect to any matter that
constitutes a Fundamental Decision without the prior approval of not less than
seven of the twelve members of the Board of Directors then authorized (or such
greater number of directors or percentage of the entire Board as may be
specified elsewhere in these By-laws or the Certificate) at a meeting of the
Board duly called and held or the unanimous written consent of the Board.
Meetings shall be presided over by the Chairman of the Board or in his or her
absence, the Chief Executive Officer (if different from the Chairman), or in his
or her absence, by his or her designee (provided such designee is a member of
the Office of the Chief Executive). The Board of Directors shall keep written
minutes of its meetings. The Secretary of the Corporation shall act as secretary
of the meeting, but in his or her absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.9 Indemnification.
The Corporation shall indemnify members of the Board of Directors and
officers of the Corporation and their respective heirs, personal representatives
and successors in interest for or on account of any action performed on behalf
of the Corporation, to the fullest extent provided by the laws of the State of
Delaware and the Certificate, as now or hereafter in effect.
Section 2.10 Executive Committee of the Board of Directors.
There shall be an executive committee of the Board of Directors, to be
comprised of four directors, except as otherwise provided below. As of the
Effective Time, the Executive Committee shall consist of each of the following
who are directors: the Chief Executive Officer (or, except during the
Suspension Period, if any, if the Chief Executive Officer is not a director,
the Chairman of the Board), the Chief Financial Officer and two of
C-7
<PAGE>
the TVG Directors designated by TVG prior to the Effective Time; provided,
however, that during the Specified Period (as defined in Section 2.5 of these
By-laws), if the Chief Financial Officer is not a GS Director, then the Chief
Financial Officer shall not be a member of the Executive Committee and a GS
Director designated by the GS Director Committee shall be a member of the
Executive Committee. During the Specified Period, the Tie-breaking Committee
will have the power to resolve any tie vote in the event of a tie vote by the
members of the Executive Committee on any matter properly presented to the
Executive Committee for determination. Thereafter during the remainder of the
Specified Chairman Selection Periods (as defined in Section 2.5 of these By-
laws), the TVG Director Committee will have the right to resolve such tie vote.
Notwithstanding anything to the contrary contained in this Section 2.10, during
the Suspension Period (as defined in Section 2.8 of these By-laws), if any, no
committee shall have the power to resolve a tie vote of the Executive
Committee. The TVG Director Committee shall have the exclusive power to replace
the TVG Directors on the Executive Committee and the two TVG Directors on the
Executive Committee shall abstain from any vote thereon. Subject to the
limitations of the laws of the State of Delaware and except as otherwise
provided in the Certificate or these By-laws, the Executive Committee shall
have such duties and powers relating to the management of the business and
affairs of the Corporation as may be delegated to it from time to time by the
affirmative vote of seven of the twelve members of the Board of Directors then
authorized; provided, however, that (i) during the Specified Chairman Selection
Periods the Executive Committee shall have all powers of the Board of Directors
with respect to matters related to the operations of the Corporation and its
subsidiaries between Board meetings, except as otherwise determined by the
Board of Directors or delegated to the Compensation Committee, the Special
Committee or the Audit Committee pursuant to these By-laws or otherwise, or
delegated by the Board to a different committee, and (ii) in the absence of a
Chief Executive Officer during the Suspension Period, if any, the Executive
Committee as then constituted shall have and perform the powers of the Chief
Executive Officer. No matter that constitutes a Fundamental Decision shall be,
in any event, within the power of the Executive Committee to determine.
Notwithstanding the foregoing, the Executive Committee will not have decision-
making authority with respect to any of the following matters and only the
Board of Directors shall have authority to decide such matters: (1) any
acquisition by the Corporation or any person controlled by the Corporation of
any business or assets if the amount involved exceeds $25 million, (2) any
sale, lease, exchange or other disposition, pledge or encumbrance of any assets
(including any interest or participation in any person) or of all or a part of
any business of the Corporation or any person controlled by the Corporation if
the amount involved exceeds $25 million, and (3) the incurrence by the
Corporation or any person controlled by the Corporation of indebtedness in
excess of $50 million in any fiscal year. The Executive Committee shall act by
the affirmative vote of a majority of the members of such committee that are
present at any duly called meeting of the Executive Committee at which a quorum
for the transaction of business is present (except as provided above with
respect to tie votes) or by unanimous written consent. The presence of at least
fifty percent of the members of the Executive Committee at any duly called
meeting held in the United States will constitute a quorum for the transaction
of business at such meeting. From the Effective Time and until the expiration
of the Specified Period, only the Chief Executive Officer may call a meeting of
the Executive Committee; thereafter, unless a majority of the members of the
Executive Committee otherwise determine, either the Chief Executive Officer
(or, if applicable, the Chairman of the Board) or any two members of the
Executive Committee may call a meeting of the Executive Committee. The Chief
Executive Officer (or, if applicable, the Chairman of the Board) will be the
chairman of the Executive Committee; provided, however, that in the absence of
a Chief Executive Officer during the Suspension Period, if any, the chairman of
the Executive Committee shall be selected by majority vote of the remaining
members of the Executive Committee. The Executive Committee shall keep minutes
of its meetings and shall report promptly after each of its meetings to the
Board of Directors so as to keep the Board of Directors sufficiently apprised
of the Executive Committee's meetings, actions and activities, and shall be
responsible to the Board of Directors for the conduct of the enterprises and
affairs entrusted to it.
Section 2.11 Other Committees of the Board of Directors.
(a) Compensation Committee. There shall be a compensation committee of the
Board of Directors. Subject to the limitations of the laws of the State of
Delaware and except as otherwise provided in the
C-8
<PAGE>
Certificate or these By-laws, the Compensation Committee will have the power to
make all decisions (other than any Fundamental Decision) with respect to the
compensation and the terms of employment of any executive officer of the
Corporation or any of its subsidiaries, or any other officer or employee of the
Corporation or any of its subsidiaries, and will have such other powers as may
be delegated by the Board to the Compensation Committee thereafter.
Notwithstanding the foregoing, unless and until otherwise determined by the
affirmative vote of not less than seven of the twelve members of the Board of
Directors then authorized, the Compensation Committee's authority to grant
stock options, stock appreciation rights, restricted stock awards or other
stock based compensation or otherwise to obligate the Corporation to issue any
equity security pursuant to a compensation plan or otherwise (collectively,
"Compensatory Awards"), shall be limited, on a cumulative basis from the
Effective Time, to an aggregate number of shares of Common Stock equal to the
product of the total number of shares of Common Stock outstanding on a fully
diluted basis immediately following the Effective Time (the "Fully Diluted
Share Number") times two percent (2%) (the "Available Stock Number"). Further,
not more than 1% of the Fully Diluted Share Number may be granted, awarded or
issued in the aggregate to officers of the Corporation or any person controlled
by the Corporation who directly report to the Chief Executive Officer, and any
such grant, award or issuance shall reduce the Available Stock Number. If a
Compensatory Award that reduced the Available Stock Number thereafter expires
unexercised or otherwise terminates without a payment in cash, stock, property
or otherwise, the shares of Common Stock subject to the unexercised or
terminated portion of such Compensatory Award shall be added back to the
Available Stock Number. All numbers of shares calculated in accordance with
this paragraph shall be appropriately adjusted on a consistent basis for stock-
splits, stock dividends, stock combinations and similar events following the
Effective Time. The adoption or amendment of any stock option, stock
appreciation rights or other stock incentive plan for the Corporation or any
person controlled by the Corporation shall be subject to the approval of the
Board of Directors.
The members of the Compensation Committee will be the two GS Independent
Directors; the two TVG Independent Directors and the Chief Executive Officer
(or, except during the Suspension Period, if any, if the Chief Executive
Officer is not a director, the Chairman of the Board). The Compensation
Committee shall act by the affirmative vote of a majority of all of the members
of the Compensation Committee or by unanimous written consent. The Chief
Executive Officer (or, if applicable, the Chairman of the Board) will be the
chairman of the Compensation Committee; provided, however, that in the absence
of a Chief Executive Officer during the Suspension Period, if any, the chairman
of the Compensation Committee shall be selected by majority vote of the
remaining members of the Compensation Committee. Any member of the Compensation
Committee who is an employee of the Corporation or its subsidiaries will not be
present during the deliberations with respect to, and shall abstain from and
not be present during any vote on, matters related to such employee's own
compensation or Compensatory Awards. The Compensation Committee shall keep
minutes of its meetings and shall report to the Board of Directors promptly
after each of its meetings so as to keep the Board of Directors sufficiently
apprised of the Compensation Committee's meetings, actions and activities.
(b) Special Committee. There shall be a separate committee of the Board of
Directors, which, subject to the limitations of the laws of the State of
Delaware and except as otherwise provided in the Certificate or these By-laws,
will have the exclusive power to determine matters (other than any Fundamental
Decision) related to the relationship with and among Service Providers (as
defined in the letter agreement, dated October 4, 1999, between Gemstar
International Group Limited and TV Guide, Inc. (the "Letter Agreement") (the
"Special Committee"). The approval of the Special Committee shall be required
for the adoption of a Standard Form of Service Provider Agreement (other than
one that contains only terms consistent with or more favorable to Service
Providers than the terms set forth on a schedule to the Letter Agreement (the
"Standard Terms")), for any proposed offer to or agreement with a Service
Provider that is less favorable to such Service Provider than such Standard Form
or the Standard Terms and for any proposed change in or adoption of a new
Standard Form of Service Provider Agreement or set of "Standard Terms" unless
the same is more favorable to Service Providers. The Special Committee will
include the Chief Executive Officer (or, except during the Suspension Period, if
any, if the Chief Executive Officer is not a director, the Chairman of the
Board), and, as of the Effective Time, two of the TVG Directors designated by
TVG prior to the Effective Time. The TVG Director Committee shall have the
C-9
<PAGE>
exclusive power to replace the TVG Directors on the Special Committee and the
two TVG Directors on the Special Committee shall abstain from any vote thereon.
The Special Committee shall act by the affirmative vote of a majority of all of
the members of the Special Committee or by unanimous written consent. The
Special Committee shall keep minutes of its meetings and shall report promptly
to the Board of Directors after its meetings so as to keep the Board of
Directors sufficiently apprised of the Special Committee's meetings, actions
and activities.
(c) Audit Committee. There shall be an audit committee of the Board of
Directors. The members of the Audit Committee will be the Chief Financial
Officer, one GS Independent Director and the two TVG Independent Directors.
Subject to the limitations of the laws of the State of Delaware and except as
otherwise provided in the Certificate or these By-laws, the Audit Committee
will have all powers normally accorded to the audit committee of a U.S. public
company, other than with respect to any Fundamental Decision. The Audit
Committee shall act by the affirmative vote of a majority of all members of the
Audit Committee or by unanimous written consent. The Audit Committee shall keep
minutes of its meetings, shall report to the Board of Directors promptly after
each of its meetings so as to keep the Board of Directors sufficiently apprised
of the Audit Committee's meetings, actions, and activities, and shall be
responsible to the Board of Directors for the conduct of the matters entrusted
to it.
(d) TVG Director Committee. There shall be a committee of the Board to be
comprised of all of the TVG Directors other than any TVG Independent Director
(the "TVG Director Committee"). The TVG Director Committee shall have the
powers and duties conferred upon it by these By-laws. The TVG Director
Committee shall act by the affirmative vote of a majority of all members of
such committee or by unanimous written consent. The TVG Director Committee
shall report promptly to the Board of Directors after each meeting so as to
keep the Board of Directors sufficiently apprised of such committee's meetings,
actions and activities. During the Specified Chairman Selection Periods, the
Board of Directors may dissolve the TVG Director Committee or alter or modify,
in any manner, its duties or composition (i.e., type of director) only with the
affirmative vote of not less than 10 of the 12 members of the Board of
Directors then authorized.
(e) GS Director Committee. There shall be a committee of the Board to be
comprised of all of the GS Directors other than any GS Independent Director
(the "GS Director Committee"). The GS Director Committee shall have the powers
and duties conferred upon it by these By-laws. The GS Director Committee shall
act by the affirmative vote of a majority of all of its members or by unanimous
written consent. The GS Director Committee shall report promptly to the Board
of Directors after each meeting so as to keep the Board of Directors
sufficiently apprised of such committee's meetings, actions, and activities.
During the Specified Period, the Board of Directors may dissolve the GS
Director Committee or alter or modify, in any manner, its duties or composition
(i.e., type of director) only with the affirmative vote of not less than 10 of
the 12 members of the Board of Directors then authorized; provided that if the
Specified Period should terminate as a result of the death or disability of
Henry Yuen, then, until the fifth anniversary of the Effective Time, the Board
of Directors may dissolve the GS Director Committee or alter or modify, in any
manner, its duties or composition (i.e., type of director) only with the
affirmative vote of not less than 9 of the 12 members of the Board of Directors
then authorized.
(f) Tie-breaking Committee. During the Specified Period, there shall be a
Tie-breaking Committee to be comprised of the Chairman of the Board. The Tie-
breaking Committee shall have the powers and duties conferred upon it by these
By-laws. The Tie-breaking Committee shall act by the affirmative vote of its
sole member or the written consent thereof. The Tie-breaking Committee shall
report promptly to the Board of Directors after each meeting so as to keep the
Board of Directors sufficiently apprised of such committee's meetings, actions
and activities. During the Specified Period, the Board of Directors shall not
dissolve the Tie-breaking Committee or alter or modify, in any manner, its
duties or composition.
(g) Other Committees. The Board of Directors may by resolution establish
other committees in addition to the Executive Committee, Compensation
Committee, Special Committee, Audit Committee, TVG Director Committee, GS
Director Committee and Tie-breaking Committee and shall specify with
particularity the
C-10
<PAGE>
powers and duties of any such committee. Subject to the limitations of the laws
of the State of Delaware and, except as provided in the Certificate or these
By-laws, any such committee shall exercise all powers and authority
specifically granted to it by unanimous vote of the entire Board of Directors.
Such committees shall serve at the pleasure of the Board of Directors; keep
minutes of their meetings; and have such names as the Board of Directors by
resolution may determine and shall be responsible to the Board of Directors for
the conduct of the enterprises and affairs entrusted to them. The Board of
Directors at any time may remove, with or without cause, any members of any
such other committee and may, with or without cause, disband any such other
committee.
Section 2.12 Committees Generally.
Subject to any requirements of these By-laws, each committee that may be
established by the Board of Directors pursuant to these By-laws may fix its own
rules and procedures. Notice of meetings of committees, other than of regular
meetings provided for by such rules, shall be given to committee members at
least one business day (and not less than 24 hours in advance of the scheduled
time of the meeting) prior to any such meeting to be held at any office of the
Corporation located in the continental United States. Longer notice periods
shall be provided for meetings at other locations.
Section 2.13 Directors' Compensation.
Directors shall receive such compensation for attendance at any meetings of
the Board and any expenses incidental to the performance of their duties, as
the Board of Directors shall determine by resolution. Such compensation may be
in addition to any compensation received by the members of the Board of
Directors in any other capacity.
Section 2.14 Action Without Meeting.
Nothing contained in these By-laws shall be deemed to restrict the power of
members of the Board of Directors or any committee designated by the Board to
take any action required or permitted to be taken by them without a meeting.
Section 2.15 Telephone Meetings.
Nothing contained in these By-laws shall be deemed to restrict the power of
members of the Board of Directors, or any committee designated by the Board of
Directors, to participate in a meeting of the Board of Directors, or committee,
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
ARTICLE III
Officers
Section 3.1 Executive Officers.
The officers of the Corporation shall be a Chairman of the Board, a Chief
Executive Officer, two or more Presidents and Chief Operating Officers, a Chief
Financial Officer, a General Counsel, who may be an Executive Vice President,
one or more Vice Presidents, and a Secretary, each of whom shall be elected by
the Board of Directors, and such other officers, including a Treasurer and a
Controller, as may from time to time be determined by the Board of Directors
and elected or appointed by the Board of Directors. A person may hold more than
one of the foregoing offices and during the Specified Period, the Chairman of
the Board and the Chief Executive Officer will be the same person. Subject to
Section 3.3, other than the Chief Executive Officer whose term is specified in
Section 3.2(b) hereof, each officer shall hold office until the first meeting
of the Board of Directors following the next annual meeting of stockholders
following their respective election.
C-11
<PAGE>
Section 3.2 Powers and Duties of Officers.
The officers of the Corporation shall have the authority and shall exercise
the powers and perform the duties specified below, and as may be additionally
specified by the Board of Directors or these By-laws (and in all cases where
the duties of any officer are not prescribed by the By-laws or the Board of
Directors, such officer shall follow the orders and instructions of the Chief
Executive Officer), except that in any event each officer shall exercise such
powers and perform such duties as may be required by law:
(a) Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the stockholders and the Board of Directors of the
Corporation and shall have and may exercise all such powers and perform such
other duties as are provided in these By-laws to be exercised or performed by
the Chairman and as may be assigned to the Chairman from time to time by the
Board of Directors. The Chairman of the Board shall be designated as set
forth in Section 2.5 hereof.
(b) Chief Executive Officer. The Chief Executive Officer shall, subject
to the direction and supervision of the Board of Directors, (i) have general
and active control of the Corporation's affairs and business and general
supervision of its officers, agents and employees; (ii) in the absence of the
Chairman of the Board (provided that the Chief Executive Officer does not
hold such position), preside at all meetings of the stockholders and the
Board of Directors; (iii) see that all orders and resolutions of the Board of
Directors are carried into effect; and (iv) perform all other duties incident
to the office of Chief Executive Officer and as from time to time may be
assigned to the Chief Executive Officer by the Board of Directors. Unless
otherwise authorized and directed by the Board of Directors or provided in
these By-laws, only the Chief Executive Officer or his or her designee
(provided such designee is a member of the Office of the Chief Executive)
shall execute on behalf of the Corporation all material contracts which
implement policies established by the Board of Directors. Henry C. Yuen shall
be the Chief Executive Officer of the Corporation until the fifth anniversary
of the Effective Time, unless he earlier dies or resigns or his employment is
terminated for disability as permitted by, or for "cause" within the meaning
of, his employment agreement as in effect immediately following the Effective
Time. If so determined by the affirmative vote of seven of the twelve members
of the Board of Directors then authorized (with Mr. Yuen abstaining from the
vote), Mr. Yuen's tenure as Chief Executive Officer may be extended from time
to time thereafter.
(c) President and Chief Operating Officer. Each President and Chief
Operating Officer shall, subject to the direction and supervision of the
Board of Directors and the Chief Executive Officer, perform all duties
incident to the office of President and Chief Operating Officer as from time
to time may be assigned to him or her by the Board of Directors or the Chief
Executive Officer. At the request of the Chief Executive Officer or, except
as otherwise provided in Section 2.10, in the event of his disability, legal
incapacity or refusal to act, at the request of the Board of Directors, a
President and Chief Operating Officer shall perform the duties of the Chief
Executive Officer in his capacity as an officer of the Corporation, and when
so acting shall have all the powers of, and be subject to all the
restrictions upon, the Chief Executive Officer in his capacity as an officer
of the Corporation. Each President and Chief Operating Officer shall report
to the Chief Executive Officer of the Corporation.
(d) Office of the Chief Executive. There shall be an Office of the Chief
Executive, comprised of the Chief Executive Officer of the Corporation and
the Presidents and Chief Operating Officers of the Corporation, each of whom
shall also be chairman and chief executive officer of certain of the
Corporation's business units.
(e) Executive Vice President; General Counsel. The Executive Vice
President and General Counsel shall be responsible for the legal affairs of
the Corporation and shall have such additional powers and perform such
additional duties as may be assigned to him or her by the Chief Executive
Officer or by the Board of Directors.
(f) Vice President. The Vice President, if any (or if there is more than
one, then each Vice President), shall assist the Chief Executive Officer and
the Presidents and Chief Operating Officers and
C-12
<PAGE>
shall perform such duties as may be assigned to the Vice President by the
Chief Executive Officer or by the Board of Directors. Assistant vice
presidents, if any, shall have the powers and perform the duties as may be
assigned to them by the Chief Executive Officer or by the Board of Directors.
(g) Chief Financial Officer; Treasurer. The Chief Financial Officer or,
in the absence of a Chief Financial Officer, the Treasurer shall: (i) be the
principal financial officer of the Corporation and have the care and custody
of all funds, securities, evidences of indebtedness and other personal
property of the Corporation and deposit the same in accordance with the
instructions of the Board of Directors; (ii) unless assigned to the
Controller, receive and give receipts and acquittance for moneys paid in on
account of the Corporation, and pay out of the funds on hand all bills,
payrolls and other debts of the Corporation of whatever nature upon maturity;
(iii) unless there is a Controller, be the principal accounting officer of
the Corporation and as such prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account,
prepare and file all local, state and federal tax returns, prescribe and
maintain an adequate system of internal audit and prepare and furnish to the
Chief Executive Officer, the Audit Committee and the Board of Directors
statements of account showing the financial position of the Corporation and
the results of its operations; (iv) upon request of the Board of Directors or
the Audit Committee, make such reports to it as may be required at any time;
and (v) perform all other duties incident to such office and such other
duties as from time to time may be assigned to the Chief Financial Officer by
the Board of Directors or the Chief Executive Officer. The Chief Financial
Officer and the Treasurer shall report to the Chief Executive Officer.
Assistant treasurers, if any, shall have the same powers and duties, subject
to the supervision of the Chief Financial Officer or Treasurer. If there is
no Chief Financial Officer or Treasurer, these duties shall be performed by
the Secretary or the Chief Executive Officer or other person appointed by the
Board of Directors.
(h) Secretary. The Secretary shall: (i) keep the minutes of the
proceedings of the stockholders, the Board of Directors and any committees of
the Board of Directors, which shall at all reasonable times be open to the
examination of any director; (ii) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (iii)
be custodian of the corporate records, which shall at all reasonable times be
open to the examination of any director, and of the seal of the Corporation;
(iv) keep at the Corporation's registered office or principal place of
business a record containing the names and addresses of all stockholders and
the number and class of shares held by each, unless such a record shall be
kept at the office of the Corporation's transfer agent or registrar; (v) have
general charge of the stock books of the Corporation, unless the Corporation
has a transfer agent; and (vi) in general, perform all other duties incident
to the office of Secretary, including certifying the record of proceedings of
the meetings of the stockholders or of the Board of Directors or resolutions
adopted at such meetings, signing or attesting certificates, statements or
reports required to be filed with governmental bodies or officials, signing
acknowledgments of instruments, and performing such other duties as from time
to time may be assigned to the Secretary by the Board of Directors, the Chief
Executive Officer or any President and Chief Operating Officer. The Secretary
shall report to the Chief Executive Officer. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the
Secretary.
(i) Surety Bonds. The Board of Directors may require any officer or
agent of the Corporation to execute to the Corporation a bond in such sums
and with such sureties as shall be satisfactory to the Board of Directors,
conditioned upon the faithful performance of his duties and for the
restoration to the Corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the Corporation.
(j) Budget. At the regular meeting of the Board of Directors, occurring
during the third calendar quarter in any calendar year, the Chief Executive
Officer shall present to the Board of Directors for its approval a draft
budget for the Corporation's ensuing fiscal year. The budget shall contain
information customarily included for corporations having a size and type of
business similar to that of the Corporation (the "Draft Budget"). If the
Draft Budget is approved by the Board of Directors, then the Draft Budget
shall be the budget for the Corporations' next succeeding fiscal year (the
"Budget"). If the Draft Budget is
C-13
<PAGE>
not so approved by the Board of Directors, then the Draft Budget shall be
amended by the Chief Executive Officer to reflect any changes requested by
the Board of Directors and shall be presented, together with all such
amendments, to the Board of Directors for its approval at the last regular
meeting of the Board of Directors in such calendar year. Upon the approval by
the Board of Directors of such amended Draft Budget, such budget shall be the
Budget.
Section 3.3 Resignations; Removals.
(a) Any officer of the Corporation may resign at any time, subject to any
rights or obligations under any then existing contracts between such officer
and the Corporation, by giving written notice to the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, any member of the Office of
the Chief Executive or the Secretary of the Corporation. Any such resignation
shall take effect at the time specified therein or, if the time be not
specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective unless otherwise stated
therein.
(b) Except as otherwise set forth herein, the Board of Directors, by a vote
of not less than seven of the twelve members of the Board of Directors then
authorized at any meeting thereof, or by unanimous written consent, at any
time, may, to the extent permitted by law, remove with or without cause from
office or terminate the employment of any officer, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
(c) Any vacancy in the office of any officer through death, resignation,
removal, disqualification, or other cause may be filled at any time by the
Board of Directors or, if such officer was appointed by the Chief Executive
Officer and is not a President and Chief Operating Officer, the Chief Financial
Officer or the Secretary, then by the Chief Executive Officer.
Section 3.4 Proxies.
Unless otherwise provided in the Certificate or directed by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer (if different
from the Chairman) and, with respect to the subsidiaries of the division or
corporation for which they are responsible, any other member of the Office of
the Chief Executive, or their respective designees, shall have full power and
authority on behalf of the Corporation to attend and to vote upon all matters
and resolutions at any meeting of stockholders of any corporation in which this
Corporation may hold stock, and may exercise on behalf of this Corporation any
and all of the rights and powers incident to the ownership of such stock at any
such meeting, whether regular or special, and at all adjournments thereof, and
shall have power and authority to execute and deliver proxies and consents on
behalf of this Corporation in connection with the exercise by this Corporation
of the rights and powers incident to the ownership of such stock, with full
power of substitution or revocation.
ARTICLE IV
Capital Stock
Section 4.1 Stock Certificates.
Each stockholder of the Corporation shall be entitled to a certificate
certifying the class and number of shares represented thereby and in such form,
not inconsistent with the law of the State of Delaware or the Certificate, as
the Board of Directors may from time to time prescribe.
The certificates of stock shall be signed by the Chairman of the Board, the
Chief Executive Officer (if different from the Chairman) or any other member of
the Office of the Chief Executive and by the Secretary or the Chief Financial
Officer, and sealed with the seal of the Corporation. Such seal may be a
facsimile, engraved or printed. Where any certificate is manually signed by a
transfer agent or by a registrar, the signatures of any officers upon such
certificate may be facsimiles, engraved or printed. In case any officer,
transfer agent or
C-14
<PAGE>
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such before the certificate is issued, it
may be issued by the Corporation with the same effect as if such officer,
transfer agent or registrar had not ceased to be such at the time of its issue.
Section 4.2 Transfer of Shares.
(a) Shares of the capital stock of the Corporation may be transferred on the
books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer
agent of the certificate representing such stock properly endorsed.
(b) The person in whose name shares of stock stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes, and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
Section 4.3 Lost Certificates.
The Board of Directors or any transfer agent of the Corporation may direct a
new certificate or certificates representing stock of the Corporation to be
issued in place of any certificate or certificates theretofore issued by the
Corporation, alleged to have been lost, stolen, or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate to be lost,
stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board
of Directors (or any transfer agent so authorized) shall direct to indemnify
the Corporation against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed or
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.
Section 4.4 Transfer Agent and Registrar.
The Board of Directors may appoint one or more transfer agents and one or
more registrars and may require all certificates for shares to bear the manual
or facsimile signature or signatures of any of them.
Section 4.5 Regulations.
The Board of Directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
ARTICLE V
General Provisions
Section 5.1 Offices.
The Corporation shall maintain a registered office in the State of Delaware
as required by law. The Corporation may also have offices in such other places,
either within or without the State of Delaware, as the Board of Directors may
from time to time designate or as the business of the Corporation may require.
Section 5.2 Corporate Seal.
The corporate seal shall have inscribed thereon the name of the Corporation,
the year of its organization, and the words "Corporate Seal" and "Delaware".
C-15
<PAGE>
Section 5.3 Fiscal Year.
The fiscal year of the Corporation shall end on March 31 of each calendar
year.
Section 5.4 Notices and Waivers Thereof.
Whenever any notice whatever is required by law, the Certificate or these
By-laws to be given to any stockholder, director or officer, such notice,
except as otherwise provided by law, may be given personally, or, in the case
of stockholders, by mail, or, in the case of directors or officers, by
telegram, cable or facsimile transmission, addressed to such address as appears
on the books of the Corporation. Any notice given by telegram, cable or
facsimile transmission shall be deemed to have been given when it shall have
been transmitted and any notice given by mail shall be deemed to have been
given three business days after it shall have been deposited in the United
States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate, or
these By-laws, a written waiver thereof, signed by the person entitled to such
notice, whether before or after the meeting or the time stated therein, shall
be deemed equivalent in all respects to such notice to the full extent
permitted by law.
Section 5.5 Amendments.
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors, by action taken by the
affirmative vote of not less than nine of the twelve members of the Board of
Directors then authorized, is hereby expressly authorized and empowered to
adopt, amend or repeal any provision of the By-laws of this Corporation.
Subject to the rights of the holders of any class or series of preferred
stock, these By-laws may be adopted, amended or repealed by the affirmative
vote of the holders of not less than 66 2/3% of the total voting power of the
Voting Securities of the Corporation entitled to vote thereon; provided,
however, that this paragraph shall not apply to, and no vote of the
stockholders of the Corporation shall be required to authorize, the adoption,
amendment or repeal of any provision of the By-laws by the Board of Directors
in accordance with the preceding paragraph.
For purposes of these Bylaws, the Letter of Agreement and any portion
thereof or schedule thereto may be amended, altered, modified or deleted only
with the affirmative vote of not less than nine of the twelve members of the
Board of Directors then authorized or by the affirmative vote of the holders of
not less than 66 2/3% of the total voting power of the Voting Securities of the
Corporation entitled to vote thereon.
C-16
<PAGE>
SCHEDULE I
FUNDAMENTAL BOARD DECISIONS
Fundamental Board Decisions means any of the following actions:
(a) the conduct by the Corporation or any person controlled by the
Corporation of any business other than the Business (as defined below);
(b) (i) any creation of (x) any additional class of capital stock of the
Corporation or any person controlled by the Corporation or (y) any security
having a direct or indirect equity participation in the Corporation or any
person controlled by the Corporation, or (ii) the sale or issuance (whether by
stock dividend, stock split, reclassification, in a public offering or
otherwise) by the Corporation or any person controlled by the Corporation of
shares of capital stock or warrants, options or rights to acquire shares of
capital stock or securities convertible into or exchangeable for capital stock
or any security having a direct or indirect equity participation in the
Corporation or any person controlled by the Corporation (other than (1) shares
of Common Stock or options to acquire shares of Common Stock issued to
employees, officers, directors and consultants of the Corporation pursuant to
commitments of the Corporation's predecessors in effect at the Effective Time,
or with the approval of the Compensation Committee but only with respect to the
Corporation's Common Stock and only within the limits set forth in Section
2.11(a) of the By-laws, (2) pursuant to the Rights Plan and (3) shares of
Common Stock issued in any acquisition permitted by and subject to the
limitations of paragraph (d) below), or (iii) any repurchases of stock in
excess of $50 million in any fiscal year by the Corporation or any person
controlled by the Corporation;
(c) any acquisition by the Corporation or any person controlled by the
Corporation of a business or assets (including, without limitation, an interest
or participation in any person) that is not within the scope of the Business;
(d) any acquisition by the Corporation or any person controlled by the
Corporation of any business or assets (including, without limitation, an
interest or participation in any person) that is within the scope of the
Business if the amount involved in such acquisition (and any related
transactions) plus the amount involved in all other acquisitions authorized in
the same fiscal year (whether by the Board or a duly authorized officer) which
were not Fundamental Board Decisions within the meaning of this subparagraph
(d) equals or exceeds 2% of the Average Market Capitalization (as defined
below) of the Corporation for the immediately preceding fiscal year;
(e) any disposition of all or any part of any material intellectual property
rights (all patent rights being deemed material) of the Corporation (except
through non-exclusive licenses) or any person controlled by the Corporation
(whether by sale or exchange, by exclusive license in any field of use,
contribution to joint venture or any other arrangement that is the practical
equivalent of a disposition of either any of the economic benefits of or the
right to control the exploitation of any such intellectual property rights) and
any pledge or encumbrance of any such intellectual property rights;
(f) the entering into by the Corporation or any person controlled by the
Corporation of any contracts (other than those pertaining or relating to
intellectual property rights) that are exclusive as against the Corporation or
any person controlled by the Corporation, except for such contracts entered
into in the ordinary course of the Corporation's business and which do not
involve an amount in excess of $50 million in any year;
(g) any sale, lease, exchange or other disposition, pledge or encumbrance of
any assets (including any interest or participation in any person) or of all or
a part of any business of the Corporation or any person controlled by the
Corporation if the amount involved in such transaction (and any related
transactions) or the fair market value of the assets so disposed of, pledged or
encumbered in such transaction (and any related transactions) plus the amount
involved in all other such dispositions, pledges or encumbrances which were not
Fundamental Board Decisions within the meaning of this subparagraph (g) and
were authorized in the same
C-17
<PAGE>
fiscal year equals or exceeds 1% of the Average Market Capitalization of the
Corporation for the immediately preceding fiscal year;
(h) the entering into by the Corporation or any person controlled by the
Corporation of any contract or commitments (other than for a transaction
described in another clause of this Schedule) if the aggregate amount of
annual expenses to be incurred by the Corporation and persons controlled by
the Corporation pursuant to such contracts or commitments entered into in any
fiscal year would exceed in any year of such contract or commitment the lower
of (x) 1% of the Average Market Capitalization of the Corporation for the
fiscal year immediately preceding the year in which such Contract or
Commitment is entered into or (y) $100 million;
(i) any amendment to or modification of any provision of the Restated
Certificate of Incorporation or By-laws of the Corporation as in effect from
time to time;
(j) any merger or consolidation of the Corporation with or into any other
person and any binding share exchange to which the Corporation is a party;
(k) any merger, consolidation or binding share exchange to which any person
controlled by the Corporation is a party which involves any action that
constitutes a Fundamental Board Decision under any other clause of this
Schedule (e.g. if it involves the acquisition of assets and the amount exceeds
the applicable amount determined in accordance with clause (d) above);
(l) the declaration or payment of any dividend or distribution by the
Corporation or any person controlled by the Corporation (other than the
payment of a dividend or making of a distribution to the Corporation by a
wholly owned subsidiary of the Corporation), other than under the Rights Plan;
(m) the dissolution, liquidation or winding up of (x) the Corporation or
(y) any person controlled by the Corporation if, in the case of this clause
(y), any action that constitutes a Fundamental Board Decision under any other
clause of this Schedule is involved;
(n) the entering into by the Corporation or any person controlled by the
Corporation of any agreement or the obtaining by the Corporation or any person
controlled by the Corporation of any license or franchise which purports to
restrict the persons or categories of persons to whom shares of the
Corporation's common stock may be transferred, or imposes or purports to
impose obligations on a stockholder as such or to bind or otherwise encumber
such shareholder's shares of Common Stock or any of its other assets other
than the Rights Plan;
(o) any amendment of or waiver under the Rights Plan that would extend the
term or the expiration date of the Rights Plan, add any new Exempt Person (as
defined in the Rights Plan) (or have the equivalent effect), or change the
definition of Acquiring Person (or any defined term used in such definition)
in a manner that would be adverse to any Exempt Person, or the adoption or
implementation of any new plan with an intended effect equivalent to those of
the Rights Plan;
(p) the incurrence by the Corporation or any person controlled by the
Corporation of indebtedness or the replacement or refinancing thereof unless
after giving effect to the incurrence such indebtedness the aggregate
outstanding principal amount of the indebtedness of the Corporation and all
persons controlled by the Corporation would not exceed the sum of (i) $550
million and (ii) 1% of the Average Market Capitalization of the Corporation
for the immediately preceding fiscal year;
(q) any change in the accountants for the Corporation (which accountants
shall initially be KPMG LLP);
(r) the institution, settlement or abandonment of any legal action or
arbitration in the name of the Corporation or any person controlled by the
Corporation involving a claim or claims for equitable relief or monetary
damages aggregating in excess of (i) $25 million if the Corporation is the
defendant in such action or
C-18
<PAGE>
(ii) 1% of the Average Market Capitalization of the Corporation for the
immediately preceding fiscal year if the Corporation is the plaintiff in such
action, or involving a claim or claims by any governmental authority;
(s) the incurrence of any capital expenditures for tangible assets in excess
of $50 million in any fiscal year;
(t) the making by the Corporation or any person controlled by the
Corporation of any loan or other advance of money to any person (excluding for
this purpose financing provisions contained in purchase agreements entered into
in the ordinary course of business) or the guaranteeing of the obligations of
any person, unless the amounts involved are less than $5 million in the
aggregate outstanding at any time and such person is not an Affiliated Party
(as defined below);
(u) the adoption or change of a significant tax or accounting practice or
principle of the Corporation or the making of any significant tax or accounting
election by the Corporation or the adoption of any position for purposes of any
tax return that will have a material adverse effect on any "United States
Shareholder" (defined as a United States person who owns or is deemed to own
10% or more of the voting power of a foreign corporation) or any affiliates
(within the meaning of Rule 12b-2 under the Exchange Act) of a United States
Shareholder;
(v) any transaction with an Affiliated Party (provided that the entering
into of an employment agreement with or the payment of compensation to an
employee of the Corporation or any person controlled by the Corporation, in his
or her capacity as such, which has been duly approved by the Compensation
Committee, shall not be deemed a transaction with an Affiliated Party);
(w) any changes in the composition of the Office of the Chief Executive
(i.e., the number and type of executive officers included), except as otherwise
contemplated by these By-laws, or the assignment to any officer that is not a
member of the Office of the Chief Executive of the powers, duties or
responsibilities of a member of the Office of the Chief Executive; provided
that this item shall not be deemed to prevent the delegation by an officer of
the Corporation of his or her duties to a subordinate officer or employee;
(x) any matter that by the express terms of the By-laws or the Certificate
require the approval of a specified percentage of the entire Board or number of
the members then authorized;
(y) any change in the composition of or the delegation of additional powers
or duties to any of the Executive Committee, Compensation Committee, Special
Committee, Audit Committee, TVG Director Committee, GS Director Committee or
Tie-breaking Committee or the establishment of any new committees of the Board;
and
(z) any determination pursuant to Section 2.13 of the By-laws to pay
compensation to directors, other than the Independent Directors, in their
capacity as such.
For purposes hereof, the term "Affiliated Party" means any director or
officer of the Corporation or any director or officer of any person controlled
by the Corporation, any holder of 5% or more of the Corporation's common stock
and the respective affiliates and associates (within the meaning of Rule 12b-2
under the Exchange Act) of the foregoing.
For purposes hereof, the term "Business" shall include (subject to the
following sentence) each of the following regardless of the method by which the
Corporation conducts the same, and notwithstanding the fact that neither TVG
nor the Corporation may or may not have been conducting the following
activities:
(a) designing, specifying, developing, publishing, distributing,
operating, marketing, licensing and/or selling (and preparing and offering to
do any of the foregoing) (i) program listing guides and program promotion
services, whether in print or electronic form and whether passive or
interactive, in any and all markets, (ii) interactive advertising,
information and data services and other products and services (including
news, weather, and sports information and e-commerce, but excluding full
motion video programming services) ancillary to, incorporated in, accessed
from within or provided, marketed or sold, in connection with any such guide,
and (iii) related data broadcasting services;
C-19
<PAGE>
(b) designing, specifying, developing, publishing, distributing,
operating, marketing, licensing and/or selling (and preparing and offering to
do any of the foregoing) (i) products and services enabling sorting,
selecting, recording, time shifting and/or personal storage of data,
including television programming and other video and multimedia data and any
other such services that will enhance the businesses described in
subparagraph (a) and (ii) interactive gaming services, including horse
racing, betting and lotteries;
(c) developing, investing in, licensing and otherwise exploiting
technologies and intellectual property rights related to or useful in the
businesses described in clauses (a) and (b);
(d) the marketing and sale of program listings data to third parties to
the extent not otherwise encompassed in clauses (a) or (b);
(e) the marketing and sale of available advertising inventory on all
platforms referred to in clauses (a) and (b) above;
(f) the marketing and distribution of superstation programming;
(g) the marketing and distribution of direct-to-home satellite-delivered
entertainment services to C-band satellite dish owners;
(h) the provision of information technology consulting services;
(i) the provision of point-to-multi-point audio and data satellite
transmission services;
(j) the provision of call center based subscriber management services to
multi-channel video programming providers; and
(k) any business other than businesses described in subparagraphs (a)
through (j) above that has been authorized by the Board of Directors.
Notwithstanding the foregoing, if at any time following the Effective Time
the Corporation ceases to conduct directly and indirectly any such business
referenced in clauses (f) through (j) above (whether as a result of the
disposition of all of the assets comprising any such business or of the
Corporation's interest in the subsidiary conducting the same or otherwise) then
such business shall thereupon cease to be included within the scope of the
Business.
For purposes hereof, the term "Average Market Capitalization" means one-half
of the sum of the Market Capitalization of the Corporation on the first day of
the relevant period and on the last day of the relevant period; provided, that
with respect to the Corporation's fiscal year in which the Effective Time
occurs, such term shall mean one-half of the sum of the Market Capitalization
of the Corporation on the business day immediately following the Effective Time
and on the last day of the Corporation's fiscal year. "Market Capitalization"
means the product of the number of shares of the Corporation's common stock
outstanding on the relevant date times the average of the market prices of the
Corporation's common stock for the 20 consecutive trading days immediately
preceding such date; provided that with respect to the relevant date which is
the business day immediately following the Effective Time, the term shall mean
the product of the number of shares of the Corporation's Common Stock
outstanding on such date times the market price of the Corporation's common
stock on such date.
For purposes hereof, the term "Rights Plan" means the Rights Agreement,
dated as of July 10, 1998, between Gemstar International Group Limited and
American Stock Transfer and Trust, as rights agent, as in effect immediately
following the Effective Time.
_______________
* If the Corporation replaces the Rights Plan with a new rights plan as
contemplated by the Merger Agreement, this definition will be amended
appropriately.
C-20
<PAGE>
Exhibit D
<PAGE>
GEMSTAR INTERNATIONAL GROUP LIMITED
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
Amended and Restated Rights Agreement
Effective as of February ___, 2000
<PAGE>
<TABLE>
<S> <C> <C>
Section 1. Certain Definitions.................................................. 1
Section 2. Appointment of Rights Agent.......................................... 4
Section 3. Issue of Right Certificates.......................................... 4
Section 4. Form of Right Certificates........................................... 5
Section 5. Countersignature and Registration.................................... 5
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.............. 6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........ 6
Section 8. Cancellation and Destruction of Right Certificates................... 7
Section 9. Availability of Preferred Shares..................................... 7
Section 10. Preferred Shares Record Date......................................... 8
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights... 8
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........... 14
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 14
Section 14. Fractional Rights and Fractional Shares.............................. 15
Section 15. Rights of Action..................................................... 16
Section 16. Agreement of Right Holders........................................... 16
Section 17. Right Certificate Holder Not Deemed a Stockholder.................... 16
Section 18. Concerning the Rights Agent.......................................... 17
Section 19. Merger or Consolidation or Change of Name of Rights Agent............ 17
Section 20. Duties of Rights Agent............................................... 18
Section 21. Change of Rights Agent............................................... 19
Section 22. Issuance of New Right Certificates................................... 20
Section 23. Redemption........................................................... 20
Section 24. Exchange............................................................. 21
Section 25. Notice of Certain Events............................................. 22
Section 26. Notices.............................................................. 22
Section 27. Supplements and Amendments........................................... 23
Section 28. Successors........................................................... 23
Section 29. Benefits of this Agreement........................................... 23
Section 30. Severability......................................................... 23
Section 31. Governing Law........................................................ 24
Section 32. Counterparts......................................................... 24
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 33. Descriptive Headings................................................. 24
</TABLE>
Exhibit A - Rights and Preferences of Series A Junior Preferred Stock
Exhibit B - Form of Right Certificate
<PAGE>
THIS AMENDED AND RESTATED RIGHTS AGREEMENT (this "Agreement"), is made
effective as of February ___, 2000, by and between Gemstar International Group
Limited, a Delaware corporation which is the continuation of Gemstar
International Group Limited, a British Virgin Islands corporation (the Delaware
entity as the continuation of the British Virgin Island corporation is referred
to herein as the "Company"), and American Stock Transfer & Trust Company, a New
York company (the "Rights Agent").
WHEREAS, the Board of Directors of the Company previously authorized
and declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as such term is hereinafter defined) of the Company
outstanding on the later of (i) July 10, 1998, and (ii) such date as permitted
by the Nasdaq Stock Market (the "Record Date"), each Right representing on the
Record Date the right to purchase one one-hundredth of a Preferred Share (as
such term is hereinafter defined), upon the terms and subject to the conditions
set forth in the Rights Agreement (the "Original Agreement"), dated as of July
10, 1998 (the "Original Agreement Date"), and further authorized and directed
the issuance of one Right with respect to each Common Share that becomes
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
WHEREAS, pursuant to Section 388 of the Delaware General Corporation
Law, the Company has, as of the date hereof, changed its place of incorporation
from the British Virgin Islands to the State of Delaware (the "Domestication")
by filing with the Delaware Secretary of State (i) a certificate of
domestication and (ii) a certificate of incorporation.
WHEREAS, in connection with the Domestication, the Company is amending
and restating the Original Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the Original Agreement is hereby amended and
restated in its entirety as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, any entity holding
Common Shares for or pursuant to the terms of any such plan or any Exempt Person
(as such term is hereinafter defined); provided, however, that in the event that
-------- -------
any Exempt Person shall after July 10, 1998 become the Beneficial Owner of any
additional Common Shares of the Company (other than by exercise of employee or
director options granted prior to or after the Original Agreement Date by the
Company), then such Exempt Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of (i) an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to
<PAGE>
15% or more of the Common Shares of the Company then outstanding, or (ii) a
grant or exercise of employee or director options granted prior to or after the
Original Agreement Date by the Company; provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person". Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the Original Agreement Date.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
-------- -------
Beneficial Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person
-------- -------
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
2
<PAGE>
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in New York are authorized or obligated
by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a Business
-------- -------
Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
the shares of common stock (formerly ordinary shares), par value $0.01 per
share, of the Company. "Common Shares" when used with reference to any Person
other than the Company shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Exempt Person" means Thomas Lau, or such Person or Persons who
succeed to ownership of his Common Shares either by will or pursuant to
applicable statutes of descent and distribution.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7.
(j) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(k) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock (formerly Series A Junior Participating Preference
Shares), par value $0.01 per share, of the Company having the rights and
preferences set forth in Exhibit A.
(l) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(m) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(n) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
3
<PAGE>
Section 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
---------------------------
the tenth day after the Shares Acquisition Date or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors
prior to or after such time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares (including any such date which is
after the Original Agreement Date and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the date hereof but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in an Amended and Restated Rights Agreement between
Gemstar International Group Limited and American Stock Transfer & Trust
Company, effective as of February ___,
4
<PAGE>
2000 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Gemstar International Group Limited. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Gemstar International Group Limited will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person (as defined in
the Rights Agreement) who becomes an Acquiring Person (as defined in the
Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
--------------------------
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, each of the Right Certificates shall (as of the
Original Agreement Date) entitle the holders thereof to purchase such number of
one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its Chief Financial Officer or its Secretary, either
manually or by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary of the
Company, either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper
5
<PAGE>
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
- ---------------------------------------------------------------------
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights. (a) The registered holder of any Right Certificate may exercise the
- ------
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on July 10, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
6
<PAGE>
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall (as of the Original
Agreement Date) initially be $225.00, and shall be subject to adjustment from
time to time as provided in Section 11 or 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants
--------------------------------
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with
7
<PAGE>
Section 7. The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name
----------------------------
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
- -------- -------
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
--------------------------------------------------------
of Rights. The Purchase Price, the number of Preferred Shares covered by each
- ---------
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the Original
Agreement Date (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so
8
<PAGE>
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification; provided,
--------
however, that in no event shall the consideration to be paid upon the
-------
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-
hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price
of the Company's Common Shares (determined pursuant to Section 11(d)
hereof) on the date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are
or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any
holder of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Agreement. No Right Certificate shall be
issued pursuant to Section 3 that represents Rights beneficially owned by
an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exercise
of the Rights. In the event the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exercise of a Right, a number
of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction
is equal to the current per share market price of one Common Share as of
the date of issuance of such Preferred Shares or fraction thereof.
9
<PAGE>
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
-------- -------
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
-------- -------
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price
10
<PAGE>
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use or,
if on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction of business
or, if the Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the Original Agreement Date),
multiplied by one hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per share market
price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
-------- -------
this Section 11(e) are not required to be made
11
<PAGE>
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest one one-millionth of a Preferred Share or one ten-thousandth of any
other share or security as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right
12
<PAGE>
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the Original Agreement Date
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
13
<PAGE>
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
- ------
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power. In the event, directly or indirectly, at any time after a Person
- -------------
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The
14
<PAGE>
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of
--------
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
15
<PAGE>
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
----------------
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or
16
<PAGE>
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay
---------------------------
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for appointment as a
--------
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name
17
<PAGE>
or in its changed name; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chief Executive Officer,
the Chief Financial Officer, or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
Anything to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, indirect, consequential or incidental loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be
18
<PAGE>
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer, or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing, mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be either (A) a corporation organized and doing business under the laws of
the United States or of the State of New York (or of any other state of the
United States so long as such corporation is
19
<PAGE>
authorized to do business as a banking institution in the State of New York), in
good standing, having an office in the State of New York, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million, or (B) an affiliate of such a corporation.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
----------------------------------
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
----------
may, at its option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the Original
Agreement Date (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
--------- -------
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or
20
<PAGE>
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
--------
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Original Agreement Date (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
- -------- -------
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with
21
<PAGE>
regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Common Share. For the purposes of this paragraph (d), the current market value
of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Certain Events. (a) In case the Company shall
------------------------
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of the Common Shares and/or Preferred Shares, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and in
the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier. The Domestication is not subject to this Section 25.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
22
<PAGE>
Gemstar International Group Limited
135 North Los Robles Avenue, Suite 800
Pasadena, California 91101
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Board of Directors may
--------------------------
from time to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions with respect
to the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
-------- -------
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
23
<PAGE>
Section 31. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
GEMSTAR INTERNATIONAL GROUP
ATTEST: LIMITED
By:______________________________ By:______________________________
Name: Name:
Title: Title:
AMERICAN STOCK TRANSFER AND TRUST
ATTEST: COMPANY
By:______________________________ By:______________________________
Name: Name:
Title: Title:
S-1
<PAGE>
Exhibit A
Rights and Preferences of Series A Junior Preferred Stock
Article XI of the Certificate of Incorporation of Gemstar International
Group Limited sets forth the rights and preferences of the Series A Junior
Preferred Stock as follows:
SECTION A
DIVIDENDS AND DISTRIBUTIONS
(1) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of the Corporation's
Common Stock, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in Common Stock, or effect a subdivision or combination or consolidation
of the outstanding Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(2) The Company shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (1) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A
Exhibit A-1
<PAGE>
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
SECTION B
VOTING RIGHTS
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein, in any other amendment to
this Certificate creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of the Corporation's stockholders.
Exhibit A-2
<PAGE>
(3) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION C
CERTAIN RESTRICTIONS
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section A are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(2) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (1) of this Section C,
purchase or otherwise acquire such shares at such time and in such manner.
Exhibit A-3
<PAGE>
SECTION D
REACQUIRED SHARES
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein or as otherwise required by law.
SECTION E
LIQUIDATION, DISSOLUTION OR WINDING UP
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION F
CONSOLIDATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
Exhibit A-4
<PAGE>
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION G
NO REDEMPTION
The shares of Series A Preferred Stock shall not be redeemable.
SECTION H
RANK
The Series A Preferred Stock shall rank, with respect to the payment
of dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
SECTION I
AMENDMENT OF ARTICLE
This Article shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
Exhibit A-5
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 10, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
GEMSTAR INTERNATIONAL GROUP LIMITED
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Amended and Restated Rights Agreement, effective as of February ___, 2000
(the "Rights Agreement"), between Gemstar International Group Limited, a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., New York time, on July 10, 2008 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-hundredth of a
fully paid non-assessable share of Series A Junior Participating Preference
Shares, par value $1.00 per share (the "Preferred Shares"), of the Company, at a
purchase price of $225.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
July 10, 1998, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one one-
hundredths of a Preferred Share which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right
Exhibit B-1
<PAGE>
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Shares (as such term is
defined in the Rights Agreement).
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
Exhibit B-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________________.
GEMSTAR INTERNATIONAL GROUP
ATTEST: LIMITED
By:___________________________ By:_________________________
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: __________________________
Authorized Signature
Exhibit B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby
sells, assigns and transfers unto_______________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ________________
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
- --------------------------------------------------------------------------------
Exhibit B-4
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: GEMSTAR INTERNATIONAL GROUP LIMITED
The undersigned hereby irrevocably elects to exercise______________
__________Rights represented by this Right Certificate to purchase the Preferred
Shares issuable upon the exercise of such Rights and requests that certificates
for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:_____________________
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Exhibit B-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
____________________
Signature
- -------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
Exhibit B-6
<PAGE>
Exhibit E
<PAGE>
RIGHTS PLAN AMENDMENT
Section 1. Certain Definitions. The definitions in Section 1 would be revised
-------------------
to read as follows:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, any entity holding Common Shares
for or pursuant to the terms of any such plan or any Exempt Person (as such term
is hereinafter defined) (provided, however, that in the event that any Exempt
Person shall after the Effective Time of the Merger become the Beneficial Owner
of any additional Common Shares of the Company (other than by an Exempt
Transaction) then such Exempt Person shall be deemed to be an "Acquiring
Person"). Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of (i) an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding, or (ii) a grant or exercise of employee
or director options granted prior to or after the Original Agreement Date by the
Company; provided, however, that if a Person shall become the Beneficial Owner
of 15% or more of the Common Shares of the Company then outstanding by reason of
an acquisition of Common Shares by the Company and shall, after such an
acquisition by the Company, become the Beneficial Owner of any additional Common
Shares of the Company (other than in an Exempt Transaction), then such Person
shall be deemed to be an "Acquiring Person". Furthermore, notwithstanding the
foregoing, the term Acquiring Person shall not include any Person who or which
as of any time becomes the Beneficial Owner of more than 15% of the Common
Shares outstanding as of such time (i) solely as the result of the acquisition
by such Person or one or more of its Affiliates or Associates of Beneficial
Ownership of additional Common Shares if such acquisition was made in the good
faith belief that such acquisition would not cause either the number of Common
Shares beneficially owned by such Person, together with its Affiliates and
Associates, to exceed 15% of the Common Shares outstanding at the time of such
acquisition or otherwise cause a Distribution Date or the adjustment provided in
Section 11(a) to occur and such good faith belief was based on the good faith
reliance on information contained in publicly filed reports or documents of the
Company which were inaccurate or out-of-date or (ii) solely as the result of the
acquisition of beneficial ownership of any Common Shares by any of such Person's
Affiliates or Associates who or which are not Controlled Related Parties of such
Person or (iii) solely as the result of any transaction or event pursuant to
which any Person who or which beneficially owns any Common Shares and was not
previously an Affiliate or Associate of such Person becomes an Affiliate or
Associate of such Person, (iv) solely as the result of the acquisition by such
Person or one or more of its Affiliates or Associates of Beneficial Ownership of
additional Common Shares if such acquisition was made in the good faith belief
that such acquisition would not cause the number of Common Shares beneficially
owned by such Person, together with its Affiliates and Associates, to exceed 15%
of the Common Shares outstanding at the time of such acquisition or otherwise
cause a Distribution Date or the adjustment provided in Section 11(a) to occur
and such good faith belief was based on the good faith reliance on inaccurate or
out-of-date information concerning the number of Common Shares beneficially
owned by any Affiliates
<PAGE>
or Associates of such Person who or which are not Controlled Related Parties of
such Person; provided, however, that in the case of any of clauses (i) through
-------- -------
(iv) (each an "Inadvertent Acquisition"), the percentage of the Common Shares
outstanding represented by the number of Common Shares beneficially owned by
such Person is reduced to 15% or less within the applicable cure period or, in
the case of an Exempt Person, such Exempt Person and its Controlled Related
Parties dispose within the applicable cure period of Beneficial Ownership of a
number of Common Shares equal in the aggregate to the number of Common Shares
Beneficial Ownership of which was acquired in the Inadvertent Acquisition. For
purposes of the immediately preceding sentence, the "applicable cure period"
shall be the period commencing on (and including) the date that such Person
becomes aware that the number of Common Shares beneficially owned by such Person
exceeds 15% of the Common Shares outstanding (or, in the case of an Exempt
Person, the date such Person first becomes aware of the Inadvertent Acquisition)
(except that if such Person has separately agreed in writing with the Company to
notify the Company once such Person becomes aware of such fact, the cure period
shall commence on (and include) the date of receipt by such Person of written
notice from the Company that the number of Common Shares beneficially owned by
such Person exceeds, as of the date such notice is given, 15% of the Common
Shares outstanding as of such date) and ending upon the Close of Business on (i)
the fifth Business Day after such date in the case of any Person described in
clause (i) of the immediately preceding sentence or (ii) the tenth Business Day
after such date in the case of any Person described in clause (ii), (iii) or
(iv) of the immediately preceding sentence; provided, however, that if such
-------- -------
reduction or disposition would require the disposition by such Person or any of
its Affiliates or Associates of any Common Shares and such Person notifies the
Company in writing that, in such Person's good faith belief, such disposition
within such period could not reasonably be accomplished without violation of
applicable law or could reasonably be accomplished only for consideration or on
terms materially disadvantageous as compared to the consideration or terms on
which such disposition could be accomplished during some longer period of time,
then such period shall be extended for such time as the directors of the Company
whose approval would be required to redeem the Rights under Section 24 shall
reasonably deem to be required in order to prevent such violation of applicable
law or shall reasonably deem to be sufficient to minimize such disadvantageous
effect (as the case may be), subject to the condition that such Person shall
during the cure period, as extended (or until such earlier time at which such
Person, together with its Affiliates and Associates, otherwise ceases to
beneficially own more than 15% of the outstanding Common Shares), diligently and
in good faith proceed to effect the required disposition as expeditiously as
reasonably practicable and comply with any arrangements regarding the voting of
a number of Common Shares beneficially owned by such Person, together with its
Affiliates and Associates, equal to the number so required to be disposed of
pending completion of such disposition as such directors of the Company shall
request (including arrangements not to vote such number of Common Shares or only
to vote such number of Common Shares in a manner approved by such directors of
the Company). For purposes of this definition, the determination of whether any
Person (other than a director of the Company, in his or her capacity as a
director of the Company) acted in "good faith" shall be conclusively determined
in good faith by those directors of the Company whose approval would be required
to redeem the Rights under Section 24.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the Original Agreement Date; provided, however,
2
<PAGE>
that (i) neither AT&T Corp. nor any of its subsidiaries shall be considered an
Affiliate or Associate of Liberty as long as (x) it is not a Controlled Related
Party of Liberty and (y) AT&T Corp. or any of its subsidiaries and Liberty have
not and do not agree to act in concert or to form a group, as such term is
defined in Section 13(d)(3) of the Exchange Act with respect to Common Shares of
the Company, (ii) no Affiliate or Associate of Liberty as of the date hereof
that is not a Controlled Related Party of Liberty shall be deemed an Affiliate
or Associate of Liberty provided that such Person and Liberty have not and do
not agree to act in concert or to form a group, as such term is defined in
Section 13(d)(3) of the Exchange Act with respect to Common Shares of the
Company and (iii) no Affiliate or Associate of News as of the date hereof that
is not a Controlled Related Party of News shall be deemed an Affiliate or
Associate of News provided that such Person and News have not and do not agree
to act in concert or to form a group, as such term is defined in Section
13(d)(3) of the Exchange Act with respect to Common Shares of the Company.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
and no Exempt Person shall be deemed the Beneficial Owner of, or to beneficially
own, any securities it has the right to acquire in any Exempt Transaction until
such securities are purchased; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act and (2)
the beneficial ownership of such security is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c) (ii) (B)) or disposing of such securities.
3
<PAGE>
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, (i) the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder and (ii) none of Henry Yuen,
Liberty or any of its Controlled Related Parties, and News or any of its
Controlled Related Parties shall, as a result of the transactions expressly
contemplated by the Merger Agreement and the exhibits thereto, be deemed to have
Beneficial Ownership of Securities with respect to which any of such other
Persons has Beneficial Ownership.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New York time,
on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean the
shares of common stock (formerly ordinary shares), par value $0.01 per share, of
the Company. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first-
mentioned Person.
(g) "Controlled Related Party" means, when used with respect to any specified
Person, each Affiliate or Associate of such Person if such Person possesses,
directly or indirectly, by or through stock ownership, agency or otherwise, or
pursuant to or in connection with an agreement, arrangement or understanding
(written or oral) with one or more other persons, the power to direct decisions
regarding the acquisition, disposition or voting by such Affiliate or Associate
of Common Shares or rights to acquire or vote Common Shares. A Person with
respect to which two Exempt Persons (other than Thomas Lau and Dynamic Core
Holdings Limited) share the power to direct such decisions shall be deemed a
Controlled Related Party of each such Exempt Person.
(h) "Distribution Date" shall have the meaning set forth in Section 3 hereof.
(i) "Effective Time of the Merger" means the closing of the Merger.
(j) "Exempt Person" means each of Thomas Lau, or such Person or Persons who
succeed to ownership of his Common Shares either by will or pursuant to
applicable statutes of descent and distribution and Dynamic Core Holdings
Limited, a British Virgin Islands corporation, for so long as such entity is
wholly owned by Thomas Lau or his successors, Liberty and its Controlled Related
Parties, and News and its Controlled Related Parties.
(k) "Exempt Transaction" shall mean (i) each of the ownership and exercise by
any Exempt Person (other than Thomas Lau and Dynamic Core Holdings Limited) of
the right to acquire, and/or the acquisition by any Exempt Person (other than
Thomas Lau and Dynamic Core Holdings Limited) of, Beneficial Ownership of Common
Shares beneficially owned by any other Exempt Person (other than Thomas Lau and
Dynamic Core Holdings Limited) or Henry Yuen,
4
<PAGE>
(ii) the acquisition by any Exempt Person (other than Thomas Lau and Dynamic
Core Holdings Limited) of Beneficial Ownership of additional Common Shares which
do not, in the aggregate, exceed the number of Common Shares transferred by
Henry Yuen before or after the Effective Time of the Merger to Persons other
than any Exempt Person (other than Thomas Lau and Dynamic Core Holdings Limited)
pursuant to a Permitted Transfer or a Fast-Track Sale (as such terms are defined
in the Stockholders Agreement, dated as of October 4, 1999, by and among the
Company, Liberty, News and Henry Yuen), (iii) the grant to or exercise by any
Exempt Person of employee or director options granted prior to or after the
Original Agreement Date by the Company, and (iv) an agreement, arrangement or
understanding solely among Exempt Persons (other than Thomas Lau and Dynamic
Core Holdings Limited) with respect to voting, holding, acquiring or disposing
of Beneficial Ownership of Common Shares.
(l) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(m) "Liberty" shall mean Liberty Media Corporation, a Delaware corporation, and
any successor (by merger, consolidation, transfer or otherwise) to all or
substantially all, of its business and assets.
(n) "Merger" shall mean the merger contemplated by that certain Agreement and
Plan of Merger dated as of October 4, 1999 by and among Gemstar International
Group Limited, a British Virgin Islands corporation, G Acquisition Subsidiary, a
Delaware corporation, and TV Guide, Inc., a Delaware corporation (the "Merger
Agreement").
(o) "News" shall mean The News Corporation Limited, a South Australia,
Australia corporation, and any successor (by merger, consolidation, transfer or
otherwise) to all, or substantially all, of its business and assets.
(p) "Person" shall mean any individual, firm, corporation, limited liability
company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock (formerly Series A Junior Participating Preference Shares), par
value $0.01 per share, of the Company having the rights and preferences set
forth in Exhibit A.
(r) "Redemption Date" shall have the meaning set forth in Section 7 hereof.
(s) "Shares Acquisition Date" shall mean the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become
such.
(r) "Subsidiary" of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
------------------------------------------------------------------
The last sentence of the first paragraph of Section 11(a)(ii) would be revised
to add the phrase "Subject to Section 24" at the beginning of such sentence. As
revised, the sentence will read as follows:
"Subject to Section 24, in the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall
5
<PAGE>
not take any action which would eliminate or diminish the benefits intended
to be afforded by the Rights."
Section 24. Exchange. The last sentence of Section 24(a) would be revised to
--------
read as follows:
"Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person, together
with all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan, or any Exempt Person (provided that
with respect to the Exempt Person, the Exempt Person is not then an
Acquiring Person))."
6
