Agreement and Plan of Merger - On Command Corp. and On Command Video Corp.
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ON COMMAND CORPORATION,
ON COMMAND MERGER CORPORATION,
AND
ON COMMAND VIDEO CORPORATION
Dated as of August 13, 1996
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 13, 1996, by
and among On Command Video Corporation ("OCV"), which is a subsidiary of Ascent
Entertainment Group, Inc. ("Ascent"), On Command Corporation ("Buyer"), which is
a wholly-owned subsidiary of Ascent, and On Command Merger Corporation ("Merger
Subsidiary"), which is a wholly-owned subsidiary of Buyer. Unless otherwise
defined in this Agreement, all capitalized terms in this Agreement shall have
the meanings assigned to them in Section 1 of this Agreement.
R E C I T A L S
WHEREAS, SpectraVision, Inc. ("SpectraVision"), Spectradyne,
Inc. ("Spectradyne") and each of the other domestic subsidiaries of
SpectraVision (collectively, the "SpectraVision Domestic Subsidiaries" and,
together with SpectraVision and Spectradyne, the "Debtors") have filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code, 11
U.S.C. Section 101, et seq., in the Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), which cases were procedurally consolidated
for joint administration as Case No. 95-659 (collectively, the "Bankruptcy
Case").
WHEREAS, on December 20, 1995, the Bankruptcy Court entered the
Order Granting the Motion for Order (1) Approving Process for Solicitation and
Selection of a Third Party Plan Sponsor, (2) Bid Protection, (3) Expense
Reimbursement, and (4) Break-Up Fee (the "Procedures Order").
WHEREAS, on April 19, 1996, SpectraVision, Ascent, OCV and the
Official Creditors' Committee appointed by the U.S. Trustee in the Bankruptcy
Case (the "Creditors' Committee" and, together with SpectraVision, Ascent and
OCV, the "PSA Parties") entered into an agreement (the "Plan Sponsor Agreement")
pursuant to which all or substantially all of the assets of the Debtors and OCV
are to be acquired, directly or indirectly, by Buyer or one or more wholly-owned
subsidiaries of Buyer.
WHEREAS, pursuant to the Plan Sponsor Agreement, the PSA Parties
agreed that: (a) Ascent shall be the plan sponsor as provided in the Procedures
Order, (b) the PSA Parties will sponsor and support a plan of reorganization for
the Debtors and the PSA Parties will not support any other plan of
reorganization except as provided in the Procedures Order, (c) the PSA Parties
will reasonably cooperate in preparing and submitting a plan of reorganization
for the Debtors, the disclosure statement for such plan (the
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"Disclosure Statement") and all other documents necessary to obtain confirmation
of such plan, (d) the Debtors and the Creditors' Committee (i) will not solicit
any other bids to acquire assets of the Debtors, (ii) will not negotiate with
any other person concerning the disposition of any assets of the Debtors (except
as provided in the Procedures Order), and (iii) will inform Ascent within one
business day of the receipt of any unsolicited bid received by either the
Creditors' Committee or the Debtors, and (e) Ascent shall be entitled to the
benefits that the Procedures Order provides for the Plan Sponsor.
WHEREAS, Buyer, Ascent, the Creditors Committee and the Debtors
(collectively, the "PA Parties") have entered into an Acquisition Agreement (the
"Acquisition Agreement") pursuant to which Buyer (or, at the election of Buyer,
a wholly-owned subsidiary of Buyer) will acquire all of the outstanding capital
stock of Spectradyne (the "Spectradyne Stock").
WHEREAS, this Agreement is being entered into by OCV, Buyer and
Merger Subsidiary (collectively, the "Parties"), and the Acquisition Agreement
is being entered into by the PA Parties, in accordance with the terms and
provisions of the Plan Sponsor Agreement for the purpose of implementing the
Plan Sponsor Agreement.
A G R E E M E N T
NOW THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants, and conditions set forth below, the Parties hereby
agree as follows:
SECTION 1
DEFINITIONS
Except as otherwise specifically specified in this Agreement or
as the context may otherwise require, the following terms have the meanings set
forth below.
"Acquisition Agreement" has the meaning given to it in the
recitals to this Agreement.
"Addendum" has the meaning given to it in the Acquisition
Agreement.
"Additional OCV Debt" has the meaning given to it in the
Acquisition Agreement.
"Aggregate Warrant Exercise Price" has the meaning given to it
in the
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Acquisition Agreement.
"Agreement" means this Agreement, as amended, supplemented or
modified from time to time in accordance with its terms.
"Ascent" means Ascent Entertainment Group, Inc., a Delaware
corporation, and its successors and assigns.
"Bankruptcy Court" has the meaning given to it in the recitals
to this Agreement.
"Buyer" means On Command Corporation, a Delaware corporation,
and its successors and assigns.
"Buyer Stock Certificate" has the meaning given to it in Section
4.2.1(b) of this Agreement.
"Buyer Stock Option Plan" means a stock option plan
substantially in the form of Exhibit A to this Agreement.
"Certificate of Merger" has the meaning given to it in Section
3.3 of this Agreement.
"Closing" has the meaning given to it in Section 3.2 of this
Agreement.
"Closing Date" has the meaning given to it in Section 3.2 of
this Agreement.
"Common Stock" means the common stock of Buyer, par value $.01
per share.
"Creditors" has the meaning given to in the Acquisition
Agreement.
"Creditors' Committee" has the meaning given to it in the
recitals to this Agreement.
"Debtors" has the meaning given to it in the recitals of this
Agreement.
"DGCL" means the General Corporation Law of the State of
Delaware.
"DIP Loan" has the meaning given to it in the Acquisition
Agreement.
"Disclosure Statement" has the meaning given to it in the
recitals to this
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Agreement.
"Disclosure Statement Order" has the meaning given to it in the
Acquisition Agreement.
"Effective Time" means the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as is specified in the Certificate of Merger).
"Employee Stock Options" has the meaning given to it in Section
4.5 of this Agreement.
"Equipment Lease" has the meaning given to it in the Acquisition
Agreement.
"Exercise Price" has the meaning given to it in the Acquisition
Agreement.
"Final Distribution Date" has the meaning given to it in the
Acquisition Agreement.
"Fully Diluted Outstanding Common Stock" has the meaning given
to it in the Acquisition Agreement.
"Initial Shares of Common Stock" has the meaning given to it in
the Acquisition Agreement.
"Merger" has the meaning given to it in Section 3.1 of this
Agreement.
"New Employee Stock Option" has the meaning given to it in
Section 4.5 of this Agreement.
"OCV" means On Command Video Corporation, a Delaware
corporation, and its successors and assigns.
"OCV Common Stock" means the common stock, $0.01 par value per
share, of OCV.
"OCV Debt" means all of the current liabilities of OCV and the
Additional OCV Debt.
"OCV Equipment" has the meaning given to it in the Acquisition
Agreement.
"OCV Reserved Stock" has the meaning given to it in the
Acquisition Ag-
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reement.
"OCV Stock Certificate" has the meaning given to it in Section
4.2.1(a) of this Agreement.
"OCV Stock Option Plan" has the meaning given to it in Section
4.5 of this Agreement.
"Parties" has the meaning given to it in the first paragraph of
this Agreement.
"Plan Sponsor Agreement" has the meaning given to it in the
recitals of this Agreement.
"Procedures Order" has the meaning given to it in the recitals
to this Agreement.
"Registration Rights Agreement" has the meaning given to it in
the Acquisition Agreement.
"Registration Statement" has the meaning given to it in Section
6.9 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Spectradyne Stock" has the meaning given to it in the recitals
to this Agreement.
"Transactions" has the meaning given to it in the Acquisition
Agreement.
"Warrant Agreement" has the meaning given to it in the
Acquisition Agreement.
"Warrant Certificate" has the meaning given to it in the
Acquisition Agreement.
"Warrants" has the meaning given to it in the Acquisition
Agreement.
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SECTION 2
PROCEDURES ORDER; PLAN SPONSOR AGREEMENT
This Agreement shall in no way adversely affect, modify or limit
any of the rights of, or the benefits provided to, Ascent under the Procedures
Order (including, but not limited to, any rights of Ascent to reimbursement of
expenses) or the Disclosure Statement Order. This Agreement and the Acquisition
Agreement shall collectively supersede, replace and terminate the Plan Sponsor
Agreement; provided, however, that notwithstanding the foregoing, (i) the
Addendum shall not be superseded, replaced, terminated or otherwise affected by
this Agreement or the Acquisition Agreement, and (ii) all of the rights and
obligations of Ascent, the Debtors and the Creditors' Committee under the
Addendum shall remain in full force and effect.
SECTION 3
THE MERGER
3.1 Merger. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL, at the Effective Time,
(i) Merger Subsidiary shall be merged with and into OCV (the "Merger"), and (ii)
the separate corporate existence of Merger Subsidiary shall cease, and OCV shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation") under the name "On Command Video Corporation."
3.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 10 of this Agreement, and subject to the satisfaction or
waiver of the conditions set forth in Section 7 of this Agreement, the closing
of the Merger (the "Closing") will take place as soon as practicable after the
satisfaction or waiver of the conditions set forth in Section 7 of this
Agreement (the "Closing Date") at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York 10022-4802, unless another date, time or place is
agreed to in writing by the Parties.
3.3 Effective Time. On the Closing Date, the Parties shall cause
the Merger to be consummated by filing a certificate of merger (the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as required by, and executed in accordance with the relevant provisions of, the
DGCL.
3.4 Effects of the Merger. The Merger shall have the effects set
forth in Sections 259, 260 and 261 of the DGCL.
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3.5 Certificate of Incorporation; By-Laws. (a) At the Effective
Time, the certificate of incorporation of OCV that is in effect immediately
prior to the Effective Time shall become the certificate of incorporation of the
Surviving Corporation.
(b) At the Effective Time, the by-laws of OCV that are in
effect immediately prior to the Effective Time shall become the by-laws of the
Surviving Corporation.
3.6 Directors and Officers. The directors of OCV immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation, and the officers of OCV
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed, as the case may be, and qualified.
SECTION 4
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any shares of
capital stock of OCV or Merger Subsidiary:
4.1.1 Common Stock of Merger Subsidiary. Each share of
common stock, par value $.01 per share, of Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
4.1.2 Cancellation of Treasury Stock. Each share of OCV
Common Stock that is issued and outstanding prior to the Effective Time and that
is owned by OCV, or by any direct or indirect subsidiary of OCV, shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
4.1.3 Conversion of OCV Common Stock. Each share of OCV
Common Stock that is issued and outstanding immediately prior to the Effective
Time (other than shares of OCV Common Stock to be cancelled in accordance with
Section 4.1.2 of this Agreement and Dissenting Shares) shall be converted into
the following (collectively, the "Merger Consideration"):
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(a) the right to receive a number of fully paid and
nonassessable shares of Common Stock that is equal to (i) the product of 72.5%
and the number of Initial Shares of Common Stock, divided by (ii) the total
number of shares of OCV Common Stock that are issued and outstanding immediately
prior to the Effective Time (other than the shares of OCV Common Stock that are
to be cancelled pursuant to Section 4.1.2 of this Agreement);
(b) if any shares of the OCV Reserved Stock are to be
distributed to holders of OCV Common Stock pursuant to the Acquisition
Agreement, the right to receive an additional number of fully paid and
nonassessable shares of Common Stock that is equal to (i) the number of shares
of the OCV Reserved Stock to be distributed to the holders of OCV Common Stock,
divided by (ii) the total number of shares of OCV Common Stock that are issued
and outstanding immediately prior to the Effective Time (other than the shares
of OCV Common Stock that are to be cancelled pursuant to Section 4.1.2 of this
Agreement); and
(c) the right to receive Series A Warrants to
purchase a number of fully paid and nonassessable shares of Common Stock that is
equal to (i) 3.8% of the Fully Diluted Outstanding Common Stock, divided by (ii)
the total number of shares of OCV Common Stock that are issued and outstanding
immediately prior to the Effective Time (other than the shares of OCV Common
Stock that are to be cancelled pursuant to Section 4.1.2 of this Agreement).
4.1.4 Shares of Dissenting Holders. Notwithstanding
anything to the contrary in this Agreement, shares of OCV Common Stock (the
"Dissenting Shares") issued and outstanding immediately prior to the Effective
Time that are held by holders (if any) that have not voted in favor of the
Merger or consented thereto in writing and that have demanded appraisal rights
with respect to their shares of OCV Common Stock in accordance with Section 262
of the DGCL and, as of the Effective Time, shall not have failed to perfect (or
shall not have effectively withdrawn or lost) their rights to appraisal and
payment under Section 262 of the DGCL shall not be converted into the right to
receive the Merger Consideration, but holders of Dissenting Shares shall be
entitled to receive a cash payment in the amount of the appraised value of such
shares (the "Appraised Share Value") in accordance with the provisions of such
Section 262, except that any Dissenting Shares held by a holder that has failed
to perfect or shall have effectively withdrawn or lost its right to appraisal
and payment under Section 262 of the DGCL shall be converted into the right to
receive the Merger Consideration. OCV shall give Buyer (i) prompt notice of any
written demands for appraisal of any shares, attempted withdrawals of such
demands, and any other instruments served pursuant to the
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DGCL received by OCV relating to stockholders' rights of appraisal, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. OCV shall not, except with the prior written
consent of Buyer, voluntarily make any payment with respect to any demands for
appraisals of capital stock of OCV, offer to settle or settle any such demands
or approve any withdrawal of any such demands. None of the shares of Common
Stock or Series A Warrants that would have been issued pursuant to Section 4.1.3
of this Agreement in exchange for Dissenting Shares if such Dissenting Shares
had been converted into the Merger Consideration will be issued to any holder of
OCV Common Stock or any other person or entity.
4.1.5. Cancellation and Retirement of OCV Common Stock. As
of the Effective Time, all shares of OCV Common Stock issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of OCV Common Stock shall cease to have any rights with respect thereto, except
that (i) each holder of OCV Common Stock (other than holders of shares to be
cancelled pursuant to Section 4.1.2 of this Agreement and holders of Dissenting
Shares) shall have the right to receive the Merger Consideration for such shares
as provided in Section 4.1.3 of this Agreement and any cash that such holder is
entitled to receive pursuant to Section 4.3 of this Agreement in lieu of a
fractional share of Common Stock, and (ii) each holder of Dissenting Shares
shall be entitled to receive a cash payment in the amount of the Appraised Share
Value of such shares as set forth in Section 4.1.4 of this Agreement.
4.2 Exchange of OCV Stock Certificates for Merger
Consideration.
4.2.1 Exchange Procedures. (a) After the Effective Time,
there shall be no further transfer of certificates representing shares of OCV
Common Stock (each, an "OCV Stock Certificate") and if any such certificates
(other than certificates representing Dissenting Shares) are presented to the
Buyer or the Surviving Corporation for transfer, such certificates shall be
cancelled against delivery of the Merger Consideration and, if certificates
representing Dissenting Shares are presented for transfer, such certificates
shall be cancelled against payment of the Appraised Share Value of such
Dissenting Shares. No Merger Consideration or cash shall be delivered or paid to
a holder of an OCV Stock Certificate until such certificate has been surrendered
to, and accepted by, Buyer (or such holder has provided Buyer with evidence that
such certificate has been lost or stolen and such holder has indemnified Buyer
against any losses or damages that might result from treating such holder as the
owner of such certificate). Buyer shall accept OCV Stock Certificates upon
compliance with such reasonable terms and conditions as Buyer may impose in
order to effect an orderly exchange thereof in accordance with normal exchange
practices. Until surrendered and accepted as contemplated by this Section
4.2.1(a), (i) each OCV Stock Certificate (other than certificates held by
holders of shares to be cancelled pursuant to Section 4.1.2 of this
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Agreement and holders of Dissenting Shares) shall be deemed at any time after
the Effective Time to represent only the right to receive the Merger
Consideration and any cash payable to the holder of such certificate in lieu of
a fractional share of Common Stock, and (ii) each OCV Stock Certificate that
represents Dissenting Shares shall be deemed at any time after the Effective
Time to represent only the right to receive a cash payment in the amount of the
Appraised Share Value of such Dissenting Shares. No interest will accrue or be
paid with respect to any cash payable to holders of OCV Common Stock in lieu of
fractional shares of Common Stock.
(b) As of the Effective Time, each holder of an
outstanding OCV Stock Certificate that has been surrendered to, and accepted by,
Buyer shall be entitled to receive (i) a certificate or certificates (each, a
"Buyer Stock Certificate") representing the whole number of shares of Common
Stock into which the aggregate number of shares of OCV Common Stock represented
by such OCV Stock Certificate have been converted pursuant to Section 4.1.3(a)
of this Agreement, and (ii) one or more Warrant Certificates representing the
right to purchase (on a net basis and without the exchange of any funds), at the
Exercise Price, the whole number of additional shares of Common Stock into which
the aggregate number of shares of OCV Common Stock represented by such OCV
Certificate have been converted pursuant to Section 4.1.3(c) of this Agreement.
(c) As of the Final Distribution Date, each holder of an
outstanding OCV Stock Certificate that has been surrendered to, and accepted by,
Buyer shall be entitled to receive one or more Buyer Stock Certificates
representing the whole number of shares of Common Stock, if any, into which the
aggregate number of shares of OCV Common Stock represented by such OCV Stock
Certificate have been converted pursuant to Section 4.1.3(b) of this Agreement.
(d) If any Merger Consideration is to be issued, or any
cash is to be paid pursuant to Section 4.1.4 or 4.3 of this Agreement, to a
person other than the registered holder of an OCV Stock Certificate surrendered
for exchange, it shall be a condition of such exchange that such OCV Stock
Certificate shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person requesting such exchange shall
pay to Buyer any transfer or other taxes required by reason of the issuance of
any Merger Consideration in a name other than that of, or the payment of cash to
any person other than, the registered holder of the OCV Stock Certificate
surrendered, or establish to the satisfaction of Buyer that such tax has been
paid or is not applicable.
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4.2.2 Distributions on Common Stock. No holder of an
unsurrendered OCV Stock Certificate shall be entitled to receive any dividends
or other distributions that are payable with respect to the shares of Common
Stock issuable in exchange for such OCV Stock Certificate until such certificate
has been surrendered to, and accepted by, Buyer in accordance with Section 4.2.1
of this Agreement. Subject to applicable law, if any dividends or distributions
are paid on the Common Stock before any OCV Stock Certificate has been
surrendered to, and accepted by, Buyer, then upon the surrender and acceptance
of such certificate, Buyer shall pay, without interest, to the holder of such
certificate all of the dividends and distributions that would have been paid to
such holder if its OCV Stock Certificate had been exchanged for Common Stock
immediately after the Effective Time.
4.2.3 No Obligations With Respect to OCV Common Stock. As
of the Effective Time, all of OCV's obligations and liabilities with respect to
the OCV Common Stock shall have been satisfied and discharged in full and
neither Buyer nor the Surviving Corporation shall have any obligation or
liability with respect to any OCV Common Stock except as provided in Sections
4.1.3, 4.1.4 and 4.3 of this Agreement.
4.3 No Fractional Shares. (a) Notwithstanding any other
provision of this Agreement, no certificates representing fractional shares of
Common Stock shall be issued upon the surrender of OCV Stock Certificates. In
the event that any holder of OCV Common Stock would otherwise have been entitled
to receive a fractional share of Common Stock pursuant to Section 4.1.3(a) or
Section 4.1.3(b) of this Agreement, such holder shall be entitled to receive in
lieu of such fractional share an amount of cash equal to the product of the
average of the high and the low trading price for the Common Stock for the five
trading days immediately following the Effective Date and the fraction of Common
Stock that such holder would have been entitled to receive.
(b) Notwithstanding any other provision of this Agreement,
no Warrant shall provide any holder with the right to purchase a fractional
share of Common Stock. In the event that any holder of OCV Common Stock would be
entitled to receive a Warrant to purchase a fractional share of Common Stock
pursuant to Section 4.1.3(c) of this Agreement, the number of shares of Common
Stock that such holder will have the right to purchase pursuant to such Warrant
shall be rounded to the nearest whole number.
4.4 No Liability. None of Buyer, the Surviving Corporation,
Merger Subsidiary or OCV shall be liable to any person in respect of any Common
Stock (or dividends or distributions with respect thereto) or cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any OCV Stock Certificate has not been surrendered prior to two
years after the Effective Time (or immediately prior to such earlier date on
which any Common Stock, any cash in lieu of fractional Common Stock or any
dividends or distributions with respect to Common Stock
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exchangeable for such certificate would otherwise escheat to or become the
property of any government entity), any such Common Stock, cash, dividends, or
distributions exchangeable for such OCV Stock Certificate shall, to the extent
permitted by applicable law, become the property of Buyer, free and clear of all
claims or interest of any person or entity previously entitled thereto.
4.5 Treatment of Employee Stock Options. Prior to the Effective
Time, the board of directors of OCV (or, if appropriate, any committee thereof)
shall adopt appropriate resolutions and take all other actions necessary to
provide for the cancellation, as of the Effective Time, of all the outstanding
stock options (the "Employee Stock Options") previously granted under the On
Command Video Corporation 1987 Stock Option Plan (the "OCV Stock Option Plan"),
whether or not then vested or exercisable. As of the Effective Time, or as soon
as practicable thereafter, there shall be substituted for each outstanding
Employee Stock Option an equivalent option (each, a "New Employee Stock Option")
to purchase shares of Common Stock pursuant to the Buyer Stock Option Plan. The
number of shares of Common Stock that a holder of any New Employee Stock Option
will be entitled to purchase, the price at which shares of Common Stock will be
purchasable upon the exercise of any New Employee Stock Option, and the dates on
which any New Employee Stock Option will vest and become exercisable will be
determined by Buyer's board of directors based upon the ratio at which OCV
Common Stock is converted into Common Stock pursuant to Section 4.1.3(a) of this
Agreement. As of the Effective Time, (1) the Buyer Stock Option Plan shall
become effective, and (2) the OCV Stock Option Plan shall terminate and no
holder of an Employee Stock Option or any participant in the OCV Stock Option
Plan shall have any right thereunder to acquire capital stock of OCV or the
Surviving Corporation.
4.6 Additional Warrants. In consideration for certain investment
banking and advisory services provided in connection with the Transactions, at
the Effective Time, Buyer shall issue to Gary Wilson Partners a Series C Warrant
to purchase, for cash, at the Exercise Price, a number of fully paid and
nonassessable shares of Common Stock that is equal to 9.2% of the Fully Diluted
Outstanding Common Stock.
4.7 Registration Rights. Subject to the terms, conditions and
exceptions set forth in the Registration Rights Agreement, any person or entity
that receives 10% or more of the outstanding shares of Common Stock and the
holder of the Series C Warrant shall have certain registration rights with
respect to such Common Stock or the Common Stock purchasable upon the exercise
of the Series C Warrant, all as set forth in the Registration Rights Agreement.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF OCV
OCV hereby makes the following representations and warranties to
Buyer, all of which shall be true and correct as of the date hereof and on the
Closing Date:
5.1 Financial Statements. The financial statements of OCV, dated
December 31, 1995, that were supplied to the Debtors and the Creditors'
Committee on April 18, 1996 fairly present in accordance with generally accepted
accounting principles (except as otherwise set forth in the notes thereto) the
financial condition and results of operations at and for the period reported
thereon, and there exists no material adverse change in such financial condition
or results of operations of OCV between that date and the Effective Time.
5.2 There are no grounds that would allow any of OCV's five (5)
largest (by number of rooms served by OCV) hotel customers, or any of OCV's
major studio movie suppliers or free-to-guest programming suppliers, to
terminate their existing service contracts with OCV.
SECTION 6
PRE- AND POST-CLOSING OBLIGATIONS
6.1 Operation of OCV's Business Prior to Closing. Prior to the
Closing, OCV shall operate its business in the ordinary course as conducted on
April 19, 1996 and will use its best efforts to maintain favorable relationships
with its major hotel customers.
6.2 Incurrence of Debt by OCV. Except as provided in this
Agreement, OCV shall not incur any debt other than OCV Debt prior to the
Effective Time.
6.3 Lease of OCV Equipment to Spectradyne. If Spectradyne
desires to lease OCV Equipment pursuant to one or more Equipment Leases and (a)
such equipment is compatible with Spectradyne's existing technology or OCV
provides support services to Spectradyne on terms similar to those it previously
provided to Comsat Video Enterprises, and (b) installation of such equipment
will not breach any of the Debtors' contracts with the hotels it serves, then
OCV shall have the right, but not the obligation, to lease such OCV Equipment to
Spectradyne pursuant to one or more Equipment Leases.
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6.4 Agreements with Ascent. Prior to the Closing Date, Ascent
and its affiliates may enter into agreements with Buyer with respect to the
provision of management services, matters of corporate governance, technology
licensing, tax sharing and other operating matters, subject to the approval of
Buyer's board of directors and on terms at least as favorable as may be
available to Buyer in comparable third-party transactions.
6.5 No Conflicting Agreements. None of the Parties shall enter
into any agreement that would adversely affect (i) its ability to perform its
obligations under this Agreement, or (ii) the rights of any other person or
entity under this Agreement, the Acquisition Agreement or the Procedures Order.
6.6 Cooperation. Buyer and OCV shall (i) cause any necessary
filings with any governmental agency to be made expeditiously, and (ii) use
their reasonable best efforts to obtain any necessary government or third-party
approvals (including, without limitation, any filings or registrations with the
SEC or state securities regulatory authorities).
6.7 OCV Debt. On or prior to the Closing Date, OCV shall use its
reasonable best efforts to estimate the aggregate amount of OCV Debt that will
be outstanding as of the Effective Time, which amount shall be used to calculate
the Aggregate Warrant Exercise Price.
6.8 Special Meeting. OCV shall take all action necessary in
accordance with and subject to applicable law and its certificate of
incorporation and by-laws to convene a special meeting of its stockholders as
soon as practicable after the approval of the Disclosure Statement by the
Bankruptcy Court to consider and vote upon the adoption and approval of this
Agreement.
6.9 Preparation of Registration Statement and Information
Statement/ Prospectus. Buyer and OCV shall prepare and file with the SEC an
information statement/prospectus with respect to the Transactions (the
"Information Statement/ Prospectus") and Buyer shall prepare and file with the
SEC a registration statement on form S-4 (the "Registration Statement"), in
which the Information Statement/Prospectus will be included as a prospectus.
Each of Buyer and OCV shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as soon as
practicable after it has been filed with the SEC. OCV will use its reasonable
best efforts to cause the Information Statement/Prospectus to be mailed to OCV's
stockholders as soon as practicable after the Registration Statement has been
declared effective under the Securities Act.
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6.10 Stock Exchange Listing. Buyer shall use its reasonable best
efforts to cause the Common Stock and the Series A Warrants to be approved for
listing on a securities exchange, subject to official notice of issuance, prior
to the Closing Date, or at Buyer's election, to be listed on the Nasdaq National
Market.
6.11 Financing. OCV shall cooperate with Buyer in connection
with Buyer obtaining the financing required to pay up to $40,000,000 of the DIP
Loan as contemplated by the Acquisition Agreement.
6.12 Further Assurances. After the Closing, OCV and Buyer shall
take such additional actions, and execute and deliver such additional documents
and instruments, as may be reasonably necessary or appropriate to effect the
transactions contemplated by, and to carry out the intent of, this Agreement.
SECTION 7
CONDITIONS PRECEDENT
7.1 Conditions to OCV's Obligations. The obligation of OCV to
consummate the Merger is subject to the satisfaction of each of the following
conditions:
7.1.1 Consents and Approvals. All consents and approvals
required to consummate the Merger shall have been obtained.
7.1.2 Absence of Adverse Order. As of the Closing Date, no
court has entered an order that enjoins, restrains, or prohibits the
consummation of the Merger.
7.1.3 Registration of Common Stock and Warrants. A
registration statement covering both the Common Stock and the Series A Warrants
shall have been filed with, and declared effective by (and no stop order or
other action has been taken, and no proceeding has been commenced, to enjoin
distribution of such shares) the SEC, and such Common Stock and Warrants shall
have been qualified under all applicable state securities laws.
7.1.4 Acquisition of the Spectradyne Stock. Prior to or
contemporaneously with the consummation of the Merger, Buyer (or, at the
election of Buyer, a wholly-owned subsidiary of Buyer) shall have acquired all
of the Spectradyne Stock pursuant to and in accordance with the terms of the
Acquisition Agreement.
7.2 Waiver of Conditions Precedent. If any condition described
in Section 7.1 of this Agreement has not been satisfied, OCV may (in its sole
discretion) waive such
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condition.
SECTION 8
TERMINATION OF THIS AGREEMENT
8.1 Termination. This Agreement may be terminated by OCV prior
to the Effective Time upon the occurrence of any of the following events:
(a) Buyer has not acquired the Spectradyne Stock on or
before October 30, 1996 or such later date as is acceptable to OCV; or
(b) The Acquisition Agreement has been terminated for any
reason.
8.2 Notice of Termination. OCV may elect to exercise its right
to terminate this Agreement by sending a written notice to the Buyer in the
manner provided in Section 9.2 of this Agreement. In the event of any
termination of this Agreement, the Parties shall have no further obligations or
liabilities to one another under this Agreement.
SECTION 9
GENERAL PROVISIONS
9.1 Expenses. Except as otherwise provided in this Agreement and
the Procedures Order, all expenses involved in the preparation and consummation
of this Agreement shall be borne by the Party incurring such expense whether or
not the Transactions are consummated; provided, however, that the costs of
registering the Common Stock and the Series A Warrants and the costs of
preparing and filing the Registration Statement shall be paid by Buyer.
9.2 Notices. All notices, requests, demands, and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally (which shall include delivery by (i)
Federal Express or other nationally recognized, reputable overnight courier
service that issues a receipt or other confirmation of delivery or (ii) fax upon
confirmation of delivery) to the Party for whom such communication is intended,
or three (3) business days after the date mailed by certified or registered U.S.
mail, return receipt requested, postage prepaid, addressed as follows:
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(a) If to OCV:
On Command Video Corporation
3301 Olcott Street
Santa Clara, CA 95054
Attention: Robert Snyder
Telephone: (408) 496-1800
Telecopy: (408) 496-0668
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Roger H. Kimmel
Telephone: (212) 906-1200
Telecopy: (212) 751-4864.
(b) If to Buyer:
On Command Corporation
c/o Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Denver, CO 80202
Attention: General Counsel
Telephone: (303) 572-0381
Telecopy: (303) 572-0396
With a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037-1420
Attention: William J. Perlstein
Telephone: (202) 663-6000
Telecopy: (202) 663-6363.
(c) If to Merger Subsidiary:
On Command Merger Corporation
c/o Ascent Entertainment Group, Inc.
1200 Seventeenth Street
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Denver, CO 80202
Attention: General Counsel
Telephone: (303) 572-0381
Telecopy: (303) 572-0396
With a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037-1420
Attention: William J. Perlstein
Telephone: (202) 663-6000
Telecopy: (202) 663-6363.
Buyer, OCV or Merger Subsidiary may change its address for notices by notice to
the other given pursuant to this Section 9.2.
9.3 Attorneys' Fees. If any Party initiates any litigation
against any other Party involving this Agreement prior to the Closing Date, the
prevailing Party in such action shall be entitled to receive reimbursement from
the other Party in that litigation of the prevailing Party's reasonable
attorneys' fees and other costs and expenses incurred by the prevailing Party in
connection with that litigation, including any appeal, and such reimbursement
may be included in the judgment or final order issued in that proceeding.
9.4 Waiver. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of any Party at any time to require performance by
any other Party of any provision of this Agreement shall not affect such Party's
right thereafter to enforce the same; (ii) no waiver by any Party of any default
by any other Party shall be valid unless in writing and acknowledged by an
authorized representative of the nondefaulting Party, and no such waiver shall
be taken or held to be a waiver by the nondefaulting Party of any other
preceding or subsequent default; and (iii) no extension of time granted by any
Party for the performance of any obligation or act by the any other Party shall
be deemed to be an extension of time for the performance of any other obligation
or act under this Agreement.
9.5 Assignment; Survival of Representations, Warranties and
Covenants. Except as otherwise contemplated by this Agreement, neither Buyer nor
OCV may assign its rights or delegate its obligations under this Agreement
without the prior written consent of the other. Subject to the foregoing, this
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The representations and
warranties of OCV in this Agreement shall expire on the Closing Date and neither
OCV nor Buyer shall have any liability after the Closing Date for any
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breach of any of their representations, warranties, covenants or agreements
under this Agreement; provided, however, that notwithstanding anything to the
contrary in this Agreement, following consummation of the Merger, the respective
obligations of Buyer and the Surviving Corporation under Section 4 shall survive
and continue until performed or discharged in accordance with the terms of this
Agreement.
9.6 Entire Agreement. This Agreement and the Exhibits and
Schedules to this Agreement (which are incorporated by reference herein)
constitute the entire agreement among the Parties with respect to the Merger,
and supersede and terminate any prior agreement between the Parties (written or
oral) with respect to the Merger. Neither this Agreement nor any Exhibit or
Schedule may be altered or amended except by an instrument in writing signed by
all of the Parties.
9.7 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on each such counterpart
were on the same instrument.
9.8 Construction. The Section headings of this Agreement are for
convenience only and in no way modify, interpret or construe the meaning of
specific provisions of this Agreement. As used in this Agreement, the neuter
gender shall also denote the masculine and feminine, and the masculine gender
shall also denote the neuter and feminine, where the context so permits.
9.9 Severability. If any one or more of the provisions contained
in this Agreement should be found invalid, illegal or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired
thereby. Any illegal or unenforceable term shall be deemed to be void and of no
force and effect only to the minimum extent necessary to bring such term within
the provisions of applicable law and such term, as so modified, and the
remainder of this Agreement shall then be fully enforceable.
9.10 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the choice of law rules of that jurisdiction.
9.11 Counsel. Each Party has been represented by its own counsel
in connection with the negotiation and preparation of this Agreement and,
consequently, each Party waives the application of any rule of law that would
otherwise be applicable in connection with the interpretation of this Agreement
(including, but not limited to, any rule of law to the effect that any provision
of this Agreement shall be interpreted or construed against the Party whose
counsel drafted that provision).
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[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed by a respective duly authorized officer as of the date first written
above.
ON COMMAND CORPORATION
By: _____________________
Name:
Title:
ON COMMAND MERGER CORPORATION
By: _____________________
Name:
Title:
ON COMMAND VIDEO CORPORATION
By: _____________________
Name:
Title:
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