-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RF5/lAbZNO4Zk7QDp6DyX8yvDrY0pke5NviJQbN69uSa/RCtfb8XEniJrmo7Sarl bb40eGx/FpdUR8vH4KGIbA== 0000940180-00-000526.txt : 20000502 0000940180-00-000526.hdr.sgml : 20000502 ACCESSION NUMBER: 0000940180-00-000526 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000501 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRIMEDIA INC CENTRAL INDEX KEY: 0000884382 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 133647573 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-46489 FILM NUMBER: 615513 BUSINESS ADDRESS: STREET 1: 745 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10151 BUSINESS PHONE: 2127450100 MAIL ADDRESS: STREET 1: 745 5TH AVE CITY: NEW YORK STATE: NY ZIP: 10151 FORMER COMPANY: FORMER CONFORMED NAME: K III COMMUNICATIONS CORP DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY MEDIA CORP /DE/ CENTRAL INDEX KEY: 0001082114 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841288730 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 9197 SOUTH PEORIA STREET CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 7208755400 MAIL ADDRESS: STREET 1: 9197 SOUTH PEORIA STREET CITY: ENGLEWOOD STATE: CO ZIP: 80112 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 PRIMEDIA INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 74157K 10 1 -------------------------------- (CUSIP Number) Charles Y. Tanabe, Esq. Senior Vice President and General Counsel Liberty Media Corporation 9197 South Peoria Street Englewood, Colorado 80112 (720) 875-5400 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 19, 2000 -------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 15 Pages) - ---------------- /*/The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 74157K 10 1 ================================================================================ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Liberty Media Corporation 84-1288730 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 9,500,000 shares* NUMBER OF ----------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ----------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 9,500,000 shares* PERSON ----------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,500,000 shares* - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 6.0%. See Item 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO ================================================================================ *Assuming exercise of warrant to purchase 1,500,000 shares of common stock beneficially owned by the Reporting Person. Page 2 of 15 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Statement of LIBERTY MEDIA CORPORATION Pursuant to Section 13(d) of the Securities Exchange Act of 1934 in respect of PRIMEDIA Inc. Item 1. Security and Issuer. Liberty Media Corporation, a Delaware corporation ("Liberty" or the "Reporting Person"), is filing this Statement on Schedule 13D (this "Statement") with respect to the common stock, par value $.01 per share (the "Common Stock"), of PRIMEDIA Inc., a Delaware corporation (the "Issuer"). The Issuer's principal executive offices are located at 745 Fifth Avenue, 23rd Floor, New York, New York 10151. Item 2. Identity and Background. The reporting person is Liberty, whose principal business address is 9197 South Peoria Street, Englewood, Colorado 80112. Liberty Prime, Inc., a Delaware corporation and a wholly owned subsidiary of Liberty ("Liberty Prime"), is the registered holder of the shares of Common Stock beneficially owned by Liberty. Prior to March 9, 1999, Liberty was controlled by Tele-Communications, Inc., a Delaware corporation ("TCI"). TCI's principal business address is 9197 South Peoria Street, Englewood, Colorado 80112. TCI is principally engaged through its subsidiaries and affiliates in the acquisition, development and operation of cable television systems throughout the United States. As a result of the consummation on March 9, 1999 of the merger (the "AT&T Merger") of a wholly owned subsidiary of AT&T Corp., a New York corporation ("AT&T"), with and into TCI, (i) TCI became a wholly owned subsidiary of AT&T; (ii) the businesses and assets of the Liberty Media Group and TCI Ventures Group of TCI were combined; and (iii) the holders of TCI's Liberty Media Group common stock and TCI Ventures Group common stock received in exchange for their Page 3 of 15 shares a new class of common stock of AT&T intended to reflect the results of AT&T's "Liberty Media Group." Following the AT&T Merger, AT&T's "Liberty Media Group" consists of the assets and businesses of TCI's Liberty Media Group and its TCI Ventures Group prior to the AT&T Merger, except for certain assets that were transferred to TCI's "TCI Group" in connection with the AT&T Merger, and the "AT&T Common Stock Group" consists of all of the other assets and businesses of AT&T. AT&T's principal business address is 32 Avenue of the Americas, New York, New York 10013. AT&T is principally engaged in the business of providing voice, data and video communications services to large and small businesses, consumers and government entities in the United States and internationally. The board of directors and management of the Reporting Person manage the business and affairs of the Reporting Person, including, but not limited to, making determinations regarding the disposition and voting of the Shares. Although the Reporting Person is a wholly owned subsidiary of AT&T, a majority of the Reporting Person's board of directors consists of individuals designated by TCI prior to the AT&T Merger. If these individuals or their designated successors cease to constitute a majority of the Reporting Person's board of directors, the Reporting Person will transfer all of its assets and businesses to a new entity. Although this new entity would be owned substantially by AT&T, it would continue to be managed (including with respect to the voting and disposition of the Shares) by management of the Reporting Person prior to such transfer of assets. As a result, the Reporting Person, acting through its board of directors and management, will have the power to determine how the Shares will be voted and, subject to the limitations of the Delaware General Corporation law, will have the power to dispose of the Shares, and thus is considered the beneficial owner of the Shares for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Liberty Media Group, principally through the Reporting Person, is engaged in (i) the production, acquisition and distribution through all available formats and media of branded entertainment, educational and informational programming and software, including multimedia products, (ii) electronic retailing, direct marketing, advertising sales related to programming services, infomercials and transaction processing, (iii) international cable television distribution, telephony and programming, (iv) satellite communications, and (v) investments in wireless domestic telephony and other technology ventures. Schedule 1 attached to this Statement contains the following information concerning each director, executive officer or controlling person of the Reporting Person: (i) name and residence or business address, (ii) principal occupation or employment; and (iii) the name, principal business and address of any corporation or other organization in which such employment is conducted. Schedule 1 is incorporated herein by reference. To the knowledge of the Reporting Person, each of the persons named on Schedule 1 (the "Schedule 1 Persons") is a United States citizen, except for David J.A. Flowers, who is a Canadian citizen. During the last five years, neither the Reporting Person nor any of the Schedule 1 Persons (to the knowledge of the Reporting Person) has been convicted in a criminal proceeding (excluding Page 4 of 15 traffic violations or similar misdemeanors). During the last five years, neither the Reporting Person nor any of the Schedule 1 Persons (to the knowledge of the Reporting Person) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Schedule 2 attached to this Statement contains the following information, which has been provided to the Reporting Person by AT&T, concerning each director, executive officer or controlling person of AT&T: (i) name and residence or business address, (ii) principal occupation or employment; and (iii) the name, principal business and address of any corporation or other organization in which such employment is conducted. Schedule 2 is incorporated herein by reference. Based upon information provided to the Reporting Person by AT&T, (i) to the knowledge of AT&T, each of the persons named on Schedule 2 (the "Schedule 2 Persons") is a United States citizen, (ii) during the last five years, neither AT&T nor any of the Schedule 2 Persons (to the knowledge of AT&T) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), and (iii) during the last five years, neither AT&T nor any of the Schedule 2 Persons (to the knowledge of AT&T) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. The foregoing summary of the terms of the AT&T Merger is qualified in its entirety by reference to the text of the Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among AT&T, Italy Merger Corp. and TCI, a copy of which has been incorporated by reference as Exhibit 7(a), and to the text of the AT&T/TCI Proxy Statement/Prospectus, a copy of which has been incorporated by reference as Exhibit 7(b). Item 3. Source and Amount of Funds or Other Consideration. The Reporting Person, together with its majority-owned subsidiary Liberty Digital, Inc. ("LDIG"), entered into a Purchase Agreement, dated as of March 29, 2000, with the Issuer (the "Stock Purchase Agreement"), providing for, among other things, the acquisition (the "Acquisition") by the Reporting Person of (i) 8,000,000 shares of Common Stock (the "Shares") and (ii) a warrant (the "Warrant") to purchase up to an additional 1,500,000 shares of Common Stock (the "Warrant Shares") at an exercise price of $25.00 per share (subject to anti- dilution adjustments) to be issued pursuant to the terms of the Warrant Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime (the "Warrant Agreement"). The Acquisition was consummated on April 19, 2000, with the Reporting Person paying a cash purchase price of $200,000,000, in the aggregate, for the Shares and the Warrant. The purchase price was paid with funds from Liberty's existing cash reserves. Page 5 of 15 The foregoing summary of the terms of the Acquisition is qualified in its entirety by reference to the full texts of the Stock Purchase Agreement, Warrant Agreement and Warrant, which are included as Exhibit 7(c), 7(d) and 7(e), respectively, to this Statement and are incorporated herein by reference. Item 4. Purpose of Transaction. The Reporting Person currently holds its interest in the Issuer for investment purposes. Pursuant to the Stock Purchase Agreement, Liberty may not encumber, sell, transfer or otherwise dispose of the Shares, the Warrant or the Warrant Shares prior to April 19, 2001, other than to a subsidiary of the Reporting Person or to secure a bona fide debt. Pursuant to the Stock Purchase Agreement, Liberty received an option (the "Option") to acquire 12.5% of the equity of Primedia Broadband Video, LLC. ("Primedia Broadband"), a wholly owned subsidiary of the Issuer. Primedia Broadband is to obtain a non-exclusive license from the Issuer for the use of the Issuer's consumer and other assets in the provision of consumer-oriented broadband video, interactive video and streaming video products and services. The Option is exercisable until July 18, 2000, at an exercise price equal to the negotiated fair market value of the equity to be purchased. The exercise price is payable, at Liberty's election, in shares of Liberty Media Group Class A common stock, in shares of LDIG Series A common stock or cash. The Stock Purchase Agreement provides that Liberty may assign the Option to LDIG. Pursuant to the Stock Purchase Agreement, the Issuer purchased from LDIG 625,000 shares of LDIG Series A common stock for $25,000,000 cash. The Reporting Person intends to continuously review its investment in the Issuer, and may in the future determine (i) to acquire additional securities of the Issuer, through open market purchases, private agreements or otherwise, (ii) to dispose of all or a portion of the securities of the Issuer owned by it or (iii) to take any other available course of action, which could involve one or more of the types of transactions or have one or more of the results described in the next paragraph of this Item 4. Notwithstanding anything contained herein, the Reporting Person specifically reserves the right to change its intention with respect to any or all of such matters. In reaching any decision as to its course of action (as well as to the specific elements thereof), the Reporting Person currently expects that it would take into consideration a variety of factors, including, but not limited to, the following: the Issuer's business and prospects; other developments concerning the Issuer and the consumer and business-to-business media industries generally; other business opportunities available to the Reporting Person; developments with respect to the business of the Reporting Person; changes in law and government regulations; general economic conditions; and money and stock market conditions, including the market price of the securities of the Issuer. Page 6 of 15 Other than as set forth in this Statement, the Reporting Person has no present plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or of any of its subsidiaries; (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; (g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) A class of securities of the Issuer being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) Any action similar to any of those enumerated in this paragraph. In addition, the matters set forth in Item 6 are incorporated in this Item 4 by reference as if fully set forth herein. Item 5. Interest in Securities of the Issuer. (a) After giving effect to the Acquisition, Liberty beneficially owns through its subsidiary, Liberty Prime, 9,500,000 shares of Common Stock. Based on the 149,473,383 shares of Common Stock that were issued and outstanding as of March 13, 2000 (as indicated in the Issuer's Proxy Statement on Schedule 14A, dated April 18, 2000), the 9,500,000 shares beneficially owned by the Reporting Person represented on that date, on a pro forma basis calculated in accordance with Rule 13d-3 of the Exchange Act, 6.0% of the issued and outstanding shares of Common Stock. Of the 9,500,000 shares beneficially owned by the Reporting Person, 1,500,000 of those shares are represented by the Warrant, which is immediately exercisable. Page 7 of 15 Except as described in the preceding paragraph, to the knowledge of the Reporting Person, none of the Schedule 1 Persons and none of the Schedule 2 Persons beneficially owns any shares of Common Stock. (b) Liberty has the sole power to vote or to direct the voting of the Shares and the sole power to dispose of, or to direct the disposition of, the Shares. (c) Except for (i) the acquisition by Liberty Prime of 8,000,000 shares of Common Stock and the Warrant pursuant to the Stock Purchase Agreement and (ii) the right of Liberty Prime to acquire 1,500,000 shares of Common Stock upon exercise of the Warrant, no transactions in the shares of Common Stock have been effected by the Reporting Person or, to the knowledge of the Reporting Person, by any of the Schedule 1 Persons or Schedule 2 Persons during the past 60 days. (d) None. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Except as described below and in Items 3 and 4 above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 above and between such persons and any other person with respect to any securities of the Issuer. Liberty Prime has entered into a registration rights agreement, dated April 19, 2000 (the "Registration Rights Agreement"), with the Issuer, pursuant to which Liberty Prime has been given certain rights, commencing after April 19, 2001, to cause the Issuer to register under the Securities Act of 1933, as amended, the offer and sale of the Shares and Warrant Shares acquired by Liberty from the Issuer. The foregoing summary of the terms of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is included as Exhibit 7(f) to this Statement and is incorporated herein by reference. Item 7. Materials to be Filed as Exhibits. Exhibit No. Exhibit - ----------- ------- 7(a) Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among AT&T Corp., Italy Merger Corp. and Tele- Communications, Inc. (incorporated by reference to Appendix A to the AT&T/TCI Proxy Statement/Prospectus that forms a part of the Registration Statement on Form S-4 of AT&T (File No. 333-70279) filed on January 8, 1999 (the "AT&T Registration Statement")). Page 8 of 15 Exhibit No. Exhibit - ----------- ------- 7(b) AT&T/TCI Proxy Statement/Prospectus (incorporated by reference to the AT&T Registration Statement). 7(c) Stock Purchase Agreement, among Liberty, LDIG and the Issuer, dated as of March 29, 2000. 7(d) Warrant Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime. 7(e) Warrant, dated April 19, 2000, made by the Issuer in favor of Liberty Prime. 7(f) Registration Rights Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime. Page 9 of 15 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 1, 2000 LIBERTY MEDIA CORPORATION By: /s/ Vivian J. Carr --------------------- Name: Vivian J. Carr Title: Vice President Page 10 of 15 SCHEDULE 1 DIRECTORS AND EXECUTIVE OFFICERS OF LIBERTY MEDIA CORPORATION The name and present principal occupation of each director and executive officer of the Reporting Person are set forth below. The business address for each person listed below is c/o Liberty Media Corporation, 9197 South Peoria Street, Englewood, Colorado 80112. All executive officers and directors listed on this Schedule 1 are United States citizens, except for David J.A. Flowers, who is a Canadian citizen.
Name Principal Occupation - ---- -------------------- John C. Malone Chairman of the Board and Director of the Reporting Person; Director of AT&T Corp. Robert R. Bennett President, Chief Executive Officer and Director of the Reporting Person Gary S. Howard Executive Vice President, Chief Operating Officer and Director of the Reporting Person Daniel E. Somers Director of the Reporting Person; President and Chief Executive Officer of AT&T Broadband, LLC (f/k/a Tele-Communications, Inc.) John C. Petrillo Director of the Reporting Person; Executive Vice President, Corporate Strategy and Business Development of AT&T Corp. Larry E. Romrell Director of the Reporting Person; Consultant to AT&T Broadband, LLC (f/k/a Tele-Communications, Inc.) Jerome H. Kern Director of the Reporting Person; Chairman of the Board and Chief Executive Officer of On Command Corporation Paul A. Gould Director of the Reporting Person; Managing Director of Allen & Company Incorporated John D. Zeglis Director of the Reporting Person; Director and President of AT&T Corp.; Chairman of the Board and Chief Executive Officer of AT&T Wireless Group David B. Koff Senior Vice President and Assistant Secretary of the Reporting Person Charles Y. Tanabe Senior Vice President, General Counsel and Assistant Secretary of the Reporting Person
Page 11 of 15
Name Principal Occupation - ---- -------------------- Carl E. Vogel Senior Vice President of the Reporting Person Peter Zolintakis Senior Vice President of the Reporting Person Vivian J. Carr Vice President and Secretary of the Reporting Person Kathryn Scherff Vice President and Controller of the Reporting Person David J.A. Flowers Vice President and Treasurer of the Reporting Person
Page 12 of 15 SCHEDULE 2 DIRECTORS AND EXECUTIVE OFFICERS OF AT&T CORP. The name and present principal occupation of each director and executive officer of AT&T Corp. are set forth below. The business address for each person listed below is c/o AT&T Corp., 295 North Maple Avenue, Basking Ridge, New Jersey 07920. All executive officers and directors listed on this Schedule 2 are United States citizens.
Name Title - ---- ----- C. Michael Armstrong Chairman of the Board, Chief Executive Officer and Director Kenneth T. Derr Director; Chairman of the Board, Retired, of Chevron Corporation M. Kathryn Eickhoff Director; President of Eickhoff Economics Incorporated Walter Y. Elisha Director; Chairman of the Board and Chief Executive Officer, Retired, of Springs Industries, Inc. George M. C. Fisher Director; Chairman of the Board of Eastman Kodak Company Donald V. Fites Director; Chairman of the Board, Retired, of Caterpillar, Inc. Amos B. Hostetter, Jr. Director; Chairman of the Board of Pilot House Associates Ralph S. Larsen Director; Chairman of the Board and Chief Executive Officer of Johnson & Johnson John C. Malone Director; Chairman of the Board of the Reporting Person Donald F. McHenry Director; President of The IRC Group LLC Michael I. Sovern Director; President Emeritus and Chancellor Kent Professor of Law at Columbia University Sanford I. Weill Director; Chairman of the Board and Co-CEO of Citigroup Inc. Thomas H. Wyman Director John D. Zeglis President of AT&T Corp.; Chief Executive Officer of AT&T Wireless Group and Director Harold W. Burlingame Executive Vice President, Merger & Joint Venture Integration
Page 13 of 15
Name Title - ---- ----- James W. Cicconi Executive Vice President-Law & Government Affairs and General Counsel Mirian M. Graddick Executive Vice President, Human Resources Frank Ianna Executive Vice President and President, AT&T Network Services Michael G. Keith Executive Vice President, AT&T Wireless Group Richard J. Martin Executive Vice President, Public Relations and Employee Communication David C. Nagel President of AT&T Labs; Chief Technology Officer John C. Petrillo Executive Vice President, Corporate Strategy and Business Development Richard R. Roscitt Executive Vice President and President of AT&T Business Services Daniel E. Somers President and CEO of AT&T Broadband
Page 14 of 15 EXHIBIT INDEX Exhibit No. Exhibit - ----------- ------- 7(a) Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among AT&T Corp., Italy Merger Corp. and Tele- Communications, Inc. (incorporated by reference to Appendix A to the AT&T/TCI Proxy Statement/Prospectus that forms a part of the Registration Statement on Form S-4 of AT&T (File No. 333-70279) filed on January 8, 1999 (the "AT&T Registration Statement")). 7(b) AT&T/TCI Proxy Statement/Prospectus (incorporated by reference to the AT&T Registration Statement). 7(c) Stock Purchase Agreement, among Liberty, LDIG and the Issuer, dated as of March 29, 2000. 7(d) Warrant Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime. 7(e) Warrant, dated April 19, 2000, made by the Issuer in favor of Liberty Prime. 7(f) Registration Rights Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime. Page 15 of 15 EX-7.(C) 2 STOCK PURCHASE AGREEMENT EXHIBIT 7(c) ================================================================================ STOCK PURCHASE AGREEMENT by and among PRIMEDIA INC., LIBERTY MEDIA CORPORATION and LIBERTY DIGITAL, INC. dated as of March 29, 2000 ================================================================================ TABLE OF CONTENTS Page ARTICLE I AGREEMENT TO SELL AND PURCHASE................................... 2 SECTION 1.1 Authorization of Shares................................. 2 SECTION 1.2 Sale and Purchase....................................... 2 SECTION 1.3 The Option.............................................. 3 SECTION 1.4 The Post-Option......................................... 4 ARTICLE II CLOSING, DELIVERY AND PAYMENT.................................... 6 SECTION 2.1 Closing................................................. 6 SECTION 2.2 Closing Deliveries and Payment for the Shares and the LDIG Purchase Shares............................... 6 SECTION 2.3 Closing Deliveries and Payment for the Option or the Post-Option......................................... 8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 10 SECTION 3.1 Organization, Good Standing and Qualification.......... 10 SECTION 3.2 Subsidiaries........................................... 11 SECTION 3.3 Capitalization; Voting Rights.......................... 11 SECTION 3.4 Requisite Power and Authority.......................... 12 SECTION 3.5 SEC Reports; Financial Statements...................... 13 SECTION 3.6 Undisclosed Liabilities................................ 13 SECTION 3.7 Affiliate Agreements................................... 14 SECTION 3.8 Absence of Certain Changes............................. 14 SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc.. 14 SECTION 3.10 Intellectual Property................................. 15 SECTION 3.11 Compliance with Law; Other Instruments................ 15 SECTION 3.12 Litigation............................................ 16 SECTION 3.13 Tax Matters........................................... 16 SECTION 3.14 Employees............................................. 16 SECTION 3.15 Environmental and Safety Laws......................... 17 SECTION 3.16 Offering Valid........................................ 18 SECTION 3.17 Permits............................................... 18 SECTION 3.18 No Broker............................................. 18 SECTION 3.19 Organization, Good Standing and Qualification of PBV.. 18 SECTION 3.20 Investment Representations............................ 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER............... 19 SECTION 4.1 Requisite Power and Authority.......................... 19 SECTION 4.2 Investment Representations............................. 19 SECTION 4.3 Litigation............................................. 20 i Page SECTION 4.4 No Broker.............................................. 20 ARTICLE V REPRESENTATIONS AND WARRANTIES OF LIBERTY DIGITAL................................................... 20 SECTION 5.1 Organization, Good Standing and Qualification.......... 20 SECTION 5.2 Subsidiaries........................................... 21 SECTION 5.3 Capitalization; Voting Rights.......................... 21 SECTION 5.4 Authorization; Binding Obligations..................... 22 SECTION 5.5 SEC Reports; Financial Statements...................... 22 SECTION 5.6 Undisclosed Liabilities................................ 23 SECTION 5.7 Affiliate Agreements................................... 23 SECTION 5.8 Absence of Certain Changes. ........................... 23 SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc.. 23 SECTION 5.10 Intellectual Property................................. 24 SECTION 5.11 Compliance with Law; Other Instruments................ 24 SECTION 5.12 Litigation............................................ 25 SECTION 5.13 Tax Matters........................................... 25 SECTION 5.14 Employees............................................. 25 SECTION 5.15 Environmental and Safety Laws......................... 26 SECTION 5.16 Offering Valid........................................ 26 SECTION 5.17 Permits............................................... 26 SECTION 5.18 No Broker............................................. 26 ARTICLE VI ADDITIONAL AGREEMENTS..................................... 27 SECTION 6.1 Access................................................. 27 SECTION 6.2 Efforts................................................ 27 SECTION 6.3 Regulatory and Other Authorizations; Notices and Consents.................................................. 28 SECTION 6.4 Transfer Restrictions.................................. 28 SECTION 6.5 Registration Rights.................................... 30 SECTION 6.6 Further Strategic Relationships........................ 31 SECTION 6.7 Adjustment to the Option Purchase Price or the Post-Option Purchase Price............................ 31 SECTION 6.8 Public Announcements................................... 31 SECTION 6.9 Confidentiality........................................ 31 SECTION 6.10 No-Solicitation....................................... 32 SECTION 6.11 Formation of PBV; IPO................................. 32 SECTION 6.12 Listing of Shares in PBV.............................. 33 ARTICLE VII CONDITIONS TO CLOSING..................................... 33 SECTION 7.1 Purchase Closing Conditions............................ 33 SECTION 7.2 Option Closing Conditions.............................. 38 ii ARTICLE VIII MISCELLANEOUS............................................. 40 SECTION 8.1 Other Definitions...................................... 40 SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial...... 41 SECTION 8.3 Successors and Assigns; Assignment..................... 41 SECTION 8.4 Entire Agreement; Supersedes Prior Agreement........... 41 SECTION 8.5 Severability........................................... 41 SECTION 8.6 Amendment and Waiver................................... 41 SECTION 8.7 Delays or Omissions.................................... 41 SECTION 8.8 Notices................................................ 42 SECTION 8.9 Expenses............................................... 43 SECTION 8.10 Titles and Subtitles.................................. 43 SECTION 8.11 Termination........................................... 43 SECTION 8.12 Counterparts; Execution by Facsimile Signature........ 43 Schedules Schedule 3.3(d) Company's Capitalization Schedule 3.13 Company's Tax Matters Schedule 5.13 Liberty Digital Tax Letter Exhibits Exhibit A -- Form of Registration Rights Agreement Exhibit B -- Warrant Term Sheet iii STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of --------- March 29, 2000, among PRIMEDIA INC., a Delaware corporation (the "Company"), ------- LIBERTY MEDIA CORPORATION, a Delaware corporation ("Purchaser"), and LIBERTY --------- DIGITAL, INC., a Delaware corporation and a majority owned Subsidiary (as defined herein) of Purchaser ("Liberty Digital"). --------------- RECITALS -------- WHEREAS, the Company has authorized the sale and issuance to Purchaser of an aggregate of 8,000,000 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), and the issuance of warrants (the "Warrants") to ------------ -------- purchase initially up to 1,500,000 shares of Common Stock, on the terms and conditions set forth herein; WHEREAS, Purchaser desires to purchase from the Company 8,000,000 shares of Common Stock and the Warrants, on the terms and conditions set forth herein; WHEREAS, the Warrants will be issued pursuant to a warrant agreement (the "Warrant Agreement") with the terms described in Exhibit B hereto and with such ----------------- other terms and conditions as the Company and Purchaser shall agree and which shall be in form and substance reasonably satisfactory to the Company and Purchaser; WHEREAS, in connection with the sale of the Common Stock by the Company to Purchaser, the Company has agreed to grant to Purchaser an option to purchase membership units representing 12.5% of the issued and outstanding membership units as of the Option Closing Date (as defined herein) in PRIMEDIA Broadband Video, LLC, a Delaware limited liability company and a wholly owned Subsidiary of the Company ("PBV"), and, if the Option Closing Date does not occur for the --- reasons described in Section 1.3(d) hereof, the Company has agreed to grant to Purchaser the Post-Option (as defined herein) with respect to PBV; WHEREAS, Purchaser desires to obtain each such option, on the terms and conditions set forth herein; and WHEREAS, the Company desires to issue and sell such shares of Common Stock and the Warrants to Purchaser and grant each such option to Purchaser on the terms and conditions set forth herein; WHEREAS, Liberty Digital has authorized the sale and issuance to the Company of an aggregrate of 625,000 shares of Liberty Digital's Series A Common Stock, par value $.01 per share (the "LDIG Common Stock"), on the terms and ----------------- conditions set forth herein; WHEREAS, the Company desires to purchase from Liberty Digital 625,000 shares of LDIG Common Stock, on the terms and conditions set forth herein; and 2 WHEREAS, Liberty Digital desires to issue and sell such shares of LDIG Common Stock to the Company on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I AGREEMENT TO SELL AND PURCHASE ------------------------------ SECTION 1.1 Authorization of Shares. (a) The Company has authorized the ----------------------- sale and issuance to Purchaser of 8,000,000 shares of Common Stock (the "Shares") and the issuance to Purchaser of the Warrants. The shares of Common ------ Stock issuable upon the exercise of the Warrants shall be referred to herein as the "Warrant Shares". -------------- (b) Liberty Digital has authorized the sale and issuance to the Company of 625,000 shares of LDIG Common Stock (the "LDIG Purchase Shares"). -------------------- SECTION 1.2 Sale and Purchase. (a) Subject to the terms and conditions ----------------- hereof, the Company hereby agrees to issue and sell to Purchaser (or its designee; provided, that such designee is a direct or indirect wholly owned -------- Subsidiary of Purchaser and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreement (as defined herein) that are applicable to Purchaser; and provided, further, -------- ------- that Purchaser shall not be relieved of liability for any of its obligations hereunder) and Purchaser hereby agrees to purchase (or cause such designee to purchase) from the Company for cash, the Shares, free and clear of any Encumbrances (as defined below) (other than those (x) imposed by the federal or state securities laws or (y) placed thereon by or on behalf of Purchaser), at a purchase price of $25.00 per Share for an aggregate purchase price of $200,000,000 (the "Share Purchase Price"). In connection with the purchase of -------------------- the Shares, the Company hereby agrees to issue to Purchaser (or its designee), on the Purchase Closing Date (as defined herein), the Warrants. (b) Subject to the terms and conditions hereof, Liberty Digital hereby agrees to issue and sell to the Company (or its designee; provided, that such -------- designee is a direct or indirect wholly owned Subsidiary of the Company and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreement that are applicable to the Company; and provided, further, that the Company shall not be relieved of liability for any - -------- ------- of its obligations hereunder) and the Company hereby agrees to purchase (or cause such designee to purchase) from Liberty Digital for cash, the LDIG Purchase Shares, free and clear of any Encumbrances (other than those (x) imposed by the federal or state securities laws or (y) placed thereon by or on behalf of the Company), at a purchase price of $40.00 per LDIG Purchase Share for an aggregate purchase price of $25,000,000 (the "LDIG Share Purchase ------------------- Price"). - ----- 3 SECTION 1.3 The Option. (a) In connection with the purchase of the Shares, ---------- the Company hereby grants to Purchaser an irrevocable option (the "Option") to ------ purchase a number of membership units representing 12.5% of the issued and outstanding membership interests in PBV as of the Option Closing Date (as defined herein) (the "PBV Units"), at a purchase price (the "Option Purchase --------- --------------- Price") equal to the fair market value of the PBV Units on the date that - ----- Purchaser delivers an Option Notice to the Company, payable, at Purchaser's option, in (i) cash, (ii) shares of LDIG Common Stock or (iii) shares of Liberty Media Group Class A Common Stock, par value $.01 per share (the "Liberty Media ------------- Common Stock"). For the purposes of this Section 1.3(a), the "fair market value" - ------------ of the PBV Units will be negotiated by the parties hereto in good faith. The Option Purchase Price shall be subject to adjustment as provided in Section 6.7. (b) The Option may be exercised by Purchaser at any time commencing on the Purchase Closing and ending at midnight on the date which is ninety (90) days after the Purchase Closing (the "Option Expiration Date"). Purchaser may assign ---------------------- its right to exercise the Option to Liberty Digital, in which case, Liberty Digital shall assume all of the rights and obligations of Purchaser hereunder with respect to the Option. (c) In the event Purchaser wishes to exercise the Option, Purchaser shall send a written notice to the Company of its intention to exercise the Option, in whole but not in part (the "Option Notice"), specifying (A) whether the Option Purchase Price will be paid in cash, LDIG Common Stock or Liberty Media Common Stock, and (B) the place, time and date (the "Option Closing Date") of the ------------------- closing of such purchase (the "Option Closing"), which date shall not be less -------------- than three (3) business days and not more than five (5) business days from the date on which the conditions specified in Section 7.2 hereof are satisfied or waived, or within such other time frame as the Company and Purchaser may mutually agree. Within five (5) business days of the delivery of the Option Notice, (i) (x) if Purchaser elects to pay the Option Purchase Price with cash, Purchaser shall deliver a certificate to the Company, executed by an authorized officer of Purchaser, containing representations and warranties in the form set forth in Article IV, with appropriate changes to reflect the fact that Purchaser is purchasing the PBV Units, (y) if Purchaser elects to pay the Option Purchase Price with LDIG Common Stock, Purchaser shall deliver a certificate to the Company, executed by an authorized officer of Purchaser (any certificate delivered pursuant to clause (x) or (y), the "Liberty Certificate"), containing ------------------- representations and warranties with respect to Liberty Digital and its Subsidiaries and the LDIG Shares (as defined below) substantially in the form set forth in Article V and the representations contained in Section 4.2, or (z) if Purchaser shall elect to pay the Option Purchase Price with Liberty Media Common Stock, Purchaser shall (1) execute the Liberty Certificate solely with respect to the representations in the form set forth in Section 4.2 and (2) cause AT&T Corp., a New York corporation ("AT&T"), to deliver a certificate to ---- the Company, executed by an authorized officer of AT&T (the "AT&T Certificate"), ---------------- containing representations and warranties with respect to AT&T in substantially the form of those contained in Sections 5.1, 5.3(e), 5.4, 5.5, 5.11 and 5.16, with appropriate modifications to reflect the fact that AT&T is issuing shares of Liberty Media Common Stock and entering into the applicable Registration Rights Agreement, and (ii) the Company shall deliver a certificate to Purchaser, executed by an authorized officer of the Company (the "Company Certificate"), ------------------- containing representations and 4 warranties in the form set forth in Sections 3.16 and if Purchaser does not elect to pay the Option Purchase Price with cash, 3.20 hereof. (d) In the event that the parties cannot agree on the fair market value of the PBV Units by the later of (x) the Option Expiration Date or (y) 30 days after the date of the Option Notice, all rights of Purchaser with respect to the Option shall expire and terminate and, except as described in Section 1.4, Purchaser shall have no further rights to purchase PBV Units or any other interest in PBV. SECTION 1.4 The Post-Option. (a) In the event that the Option terminates --------------- pursuant to Section 1.3(d), the Company hereby grants to Purchaser, as of the date of such termination, an irrevocable option (the "Post-Option") to purchase ----------- a number of membership units (or an equivalent amount of common stock or other equity in PBV, if PBV is not a limited liability company at that time) that would give Purchaser a percentage equity interest in the issued and outstanding membership units (or common stock or other equity) in PBV equal to the percentage equity interest that Purchaser would have owned in PBV on the date of the Post- Option Notice (as defined below) had Purchaser exercised the Option (the "Post-Option PBV Units"), at a purchase price (the "Post-Option Purchase --------------------- -------------------- Price") equal to the fair market value of the Post-Option PBV Units (determined - ----- as described in Section 1.3(a)) on the date that Purchaser delivers a Post-Option Exercise Notice (as defined below) to the Company, payable, at Purchaser's option, in (i) cash, (ii) shares of LDIG Common Stock or (iii) shares of Liberty Media Common Stock. The Post-Option Purchase Price shall be subject to adjustment as provided in Section 6.7. (b) The Company hereby agrees to notify Purchaser of its intention to file documents relating to an initial public offering of PBV (the "Post-Option ----------- Notice") at least 120 days in advance of the date on which the Company, in good - ------ faith, anticipates filing such documents. The Post-Option may be exercised by Purchaser at any time commencing on the date on which Purchaser receives the Post-Option Notice and ending on midnight of the date which is thirty (30) days after such date. Purchaser may assign its right to exercise the Post-Option to Liberty Digital, in which case Liberty Digital shall assume all of the rights and obligations of Purchaser hereunder with respect to the Post-Option. (c) In the event Purchaser wishes to exercise the Post-Option, Purchaser shall send a written notice to the Company of its intention to exercise the Post-Option, in whole but not in part (the "Post-Option Exercise Notice"), --------------------------- specifying (A) whether the Post-Option Purchase Price will be paid in cash, LDIG Common Stock or Liberty Media Common Stock and (B) the place, time and date (the "Post-Option Closing Date") of the closing of such purchase (the "Post-Option ------------------------ ----------- Closing"), which date shall not be less than three (3) business days and not - ------- more than five (5) business days from the date on which the conditions specified in Section 7.2 hereof (as modified as set forth in clause (f) below) are satisfied or waived, or within such other time frame following satisfaction of such conditions as the Company and Purchaser may mutually agree. Within five (5) business days of the delivery of the Post-Option Exercise Notice, (i) the Company shall deliver to Purchaser a certificate, signed by an authorized officer of the Company (the "Post-Option Company Certificate"), containing (x) ------------------------------- representations and warranties with respect 5 to PBV and the Post-Option PBV Units substantially similar in scope to those provided by the Company as to itself and its Subsidiaries and the Shares in Article III (with such changes as are necessary to reflect that PBV is not a public company and is a consolidated Subsidiary of the Company) and (y) representations substantially similar to those contained in Sections 3.16 and if Purchaser does not elect to pay the Post-Option Purchase Price with cash, 3.20 hereof, and (ii) (x) if Purchaser elects to pay the Post-Option Purchase Price with cash, Purchaser shall deliver a certificate to the Company, executed by an authorized officer of Purchaser (any certificate delivered pursuant to clause (x) or (y), the "Post-Option Liberty Certificate"), containing representations ------------------------------- and warranties in the form set forth in Article IV, with appropriate changes to reflect the fact that Purchaser is purchasing the Post-Option PBV Units, (y) if Purchaser elects to pay the Post-Option Purchase Price with LDIG Common Stock, Purchaser shall deliver a certificate to the Company, executed by an authorized officer of Purchaser, containing representations and warranties with respect to Liberty Digital and its Subsidiaries and the Post- Option LDIG Shares (as defined below) substantially in the form set forth in Article V and Section 4.2, or (z) if Purchaser shall elect to pay the Post-Option Purchase Price with Liberty Media Common Stock, Purchaser shall (1) execute the Post-Option Liberty Certificate solely with respect to the representations in the form set forth in Section 4.2 and (2) cause AT&T Corp., a New York corporation ("AT&T") to deliver ---- a certificate to the Company, executed by an authorized officer of AT&T (the "AT&T Certificate"), containing representations and warranties with respect to ---------------- AT&T in substantially the form of those contained in Sections 5.1, 5.3(e), 5.4, 5.5, 5.11 and 5.16, with appropriate modifications to reflect the fact that AT&T is issuing shares of Liberty Media Common Stock and entering into the applicable Registration Rights Agreement. If Purchaser or Liberty Digital exercises the Post-Option, its officers, employees, auditors and other agents, shall be given not less than 30 days to negotiate the Post-Option Purchase Price with the Company, during which time they shall be afforded the opportunity, during normal business hours, (i) to discuss with the officers and employees of the Company and PBV the affairs, finances, accounts, assets and operations of PBV and (ii) to review such financial, operating and other data as they may reasonably request. All such information shall be subject to the confidentiality provisions contained in Section 6.1(b). The parties shall use their good faith efforts to agree upon the Post-Option Purchase Price as promptly as reasonably practicable after the Company's delivery of the Post-Option Notice. (d) At such time as the Company delivers the Post-Option Notice to Purchaser, the parties shall perform the covenants set forth in Sections 6.2, 6.3, 6.4(d) and (e) and 6.5 (substituting the terms "Post-Option Closing," "Post-Option Closing Date," "Post-Option PBV Units" and "Post-Option LDIG Shares" or "Post-Option Liberty Media Shares," if applicable for the terms "Option Closing," "Option Closing Date," "PBV Units" and "LDIG Shares" or "Liberty Media Shares", if applicable, respectively) to the extent necessary to permit Purchaser to purchase, and the Company to sell, the Post-Option PBV Units and, if applicable, the Company to acquire the Post-Option LDIG Shares or the Post-Option Liberty Media Shares as promptly as reasonably practicable after the determination of the Post-Option Purchase Price. (e) Notwithstanding the foregoing, the Post-Option will expire, and the Company will no longer have any obligations under this Section 1.4, on the earlier to occur of (i) the date on which an initial public offering of PBV is consummated or (ii) the second anniversary of the 6 Purchase Closing Date; provided, that the Company has timely complied with its -------- obligations pursuant to Section 1.4(b), and provided further, that the -------- ------- Post-Option shall not expire pursuant to this Section 1.4(e) if the Post-Option Notice has been delivered by the Company unless, within 30 days of the delivery of such notice, Purchaser has not delivered the Post-Option Exercise Notice or if Purchaser has delivered such notice within the applicable period, the Post-Option Closing fails to occur within 90 days of the delivery of such notice, in which case, the Post- Option shall expire on such later date. (f) The obligations of Purchaser to purchase, and the Company to sell, the Post-Option PBV Units shall be subject to satisfaction (or waiver by the appropriate party) of the conditions set forth in Section 7.2, modified as follows: (i) the terms "Post-Option Closing," "Post-Option Closing Date," "Post-Option PBV Units" and "Post-Option LDIG Shares" or "Post-Option Liberty Media Shares", if applicable, shall be substituted for the terms "Option Closing," "Option Closing Date," "PBV Units" and "LDIG Shares" or Liberty Media Shares", if applicable, respectively; and (ii) the representations and warranties of the Company, on the one hand, and Purchaser or AT&T, as the case may be, on the other hand, to be made at the Post-Option Closing shall be those delivered by each of the Company and Purchaser (and, if applicable AT&T) to the other within five business days of the Company's receipt of the Post-Option Exercise Notice as described in Section 1.4(c). ARTICLE II CLOSING, DELIVERY AND PAYMENT ----------------------------- SECTION 2.1 Closing. The closing of the sale and purchase of the Shares ------- and the LDIG Purchase Shares under this Agreement (the "Purchase Closing" and, ---------------- together with the Option Closing and the Post-Option Closing, each a "Closing") ------- shall take place on the fifth business day after the satisfaction or waiver of the conditions set forth in Section 7.1 hereof, at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such other time or place as the Company, Purchaser and Liberty Digital may mutually agree (such date for the purchase of the Shares and the LDIG Purchase Shares is hereinafter referred to as the "Purchase Closing Date" and, together with the --------------------- Option Closing Date and the Post Option Closing Date, each a "Closing Date"). ------------ SECTION 2.2 Closing Deliveries and Payment for the Shares and the LDIG ---------------------------------------------------------- Purchase Shares. (a) At the Purchase Closing, subject to the terms and - --------------- conditions hereof, the Company shall deliver to Purchaser: 7 (i) a certificate or certificates evidencing the Shares, free and clear of any Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of Purchaser), registered in the name of Purchaser (or its designee; provided, that such designee is a direct or indirect wholly owned Subsidiary of Purchaser and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreements(s) that are applicable to Purchaser; and provided, further, that Purchaser shall not be relieved of liability for any of its obligations hereunder); (ii) a receipt for the Share Purchase Price; and (iii) an executed counterpart of the Warrant Agreement and executed certificates in the form attached to the Warrant Agreement, evidencing the Warrants; and (iv) the certificates and other documents required to be delivered pursuant to Section 7.1(a). (b) At the Purchase Closing, subject to the terms and conditions hereof, Purchaser shall deliver to the Company: (i) the Share Purchase Price by wire transfer of immediately available funds to an account designated by the Company at least two business days prior to the Purchase Closing Date; (ii) a receipt for the Shares; (iii) an executed counterpart of the Warrant Agreement; and (iv) the certificates and other documents required to be delivered pursuant to Section 7.1(b). (c) At the Purchase Closing, subject to the terms and conditions hereof, the Company shall deliver to Liberty Digital: (i) the LDIG Share Purchase Price by wire transfer of immediately available funds to an account designated by Liberty Digital at least two business days prior to the Purchase Closing Date; (ii) a receipt for the LDIG Purchase Shares; and (iii) the certificates and other documents required to be delivered pursuant to Section 7.1(c). (d) At the Purchase Closing, subject to the terms and conditions hereof, Liberty Digital shall deliver to the Company: 8 (i) a certificate or certificates evidencing the LDIG Purchase Shares, free and clear of any Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of the Company), registered in the name of the Company (or its designee; provided, that such designee is a direct or indirect wholly owned -------- Subsidiary of the Company and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreement that are applicable to the Company; and provided, further, that -------- ------- the Company shall not be relieved of liability for any of its obligations hereunder); (ii) a receipt for the LDIG Share Purchase Price; and (iii) the certificates or other documents required to be delivered pursuant to Section 7.1(d). SECTION 2.3 Closing Deliveries and Payment for the Option or the ---------------------------------------------------- Post-Option. (a) At the Option Closing or the Post-Option Closing, as - ----------- applicable, subject to the terms and conditions hereof, the Company shall deliver to Purchaser: (i) a certificate or certificates evidencing the PBV Units or Post-Option PBV Units, as the case may be, free and clear of any Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of Purchaser), registered in the name of Purchaser; (ii) a receipt for the Option Purchase Price or the Post- Option Purchase Price, as the case may be; and (iii) the certificates and other documents required to be delivered pursuant to Section 7.2(a). (b) At the Option Closing or the Post-Option Closing, as applicable, subject to the terms and conditions hereof, Purchaser shall deliver to the Company: (i) if Purchaser elects to pay the Option Closing Price or Post-Option Closing Price: (1) in cash, the Option Closing Price or Post-Option Closing Price, as the case may be, by wire transfer of immediately available funds to an account designated by the Company at least two business days prior to the Option Closing Date or the Post-Option Closing Date, as the case may be; (2) in shares of LDIG Common Stock, a certificate or certificates evidencing the number of shares of LDIG Common Stock, free and clear of any Encumbrance (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of the Company), registered in the name of the Company (or its designee; provided, that such -------- designee is a direct or indirect 9 wholly owned subsidiary of the Company and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreement that are applicable to the Company; and provided, further, that the Company shall -------- ------- not be relieved of liability for any of its obligations hereunder), equal to the quotient (rounded to the nearest whole number) derived by dividing (i) in the case of the Option Closing, the Option Purchase Price by the average of the last reported sale price (or, if no sale price is reported on any day, the average of the high and low bid prices on such day) of a share of LDIG Common Stock on the National Market tier of the Nasdaq Stock Market ("Nasdaq") on each trading day ------ (the "LDIG Average Market Price") during the period commencing ------------------------- on the twentieth trading day prior to the Option Closing Date and ending on the fifth trading day prior to the Option Closing Date (the "LDIG Shares") or (ii) in the case of the ----------- Post-Option Closing, the Post-Option Purchase Price by the LDIG Average Market Price during the period commencing on the twentieth trading day prior to the Post-Option Closing Date and ending on the fifth trading day prior to the Post-Option Closing Date (the "Post-Option LDIG Shares"); or ----------------------- (3) in shares of Liberty Media Common Stock, a certificate or certificates evidencing the number of shares of Liberty Media Common Stock, free and clear of any Encumbrance (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of the Company), registered in the name of the Company (or its designee; provided, that such designee is a direct or indirect wholly -------- owned subsidiary of the Company and agrees to be bound by all of the terms and provisions of this Agreement and the applicable Registration Rights Agreement that are applicable to the Company; and provided, further, that the Company shall -------- ------- not be relieved of liability for any of its obligations hereunder), equal to the quotient (rounded to the nearest whole number) derived by dividing (i) in the case of the Option Closing, the Option Purchase Price by the average of the last reported sale price on the New York Stock Exchange ("NYSE") Composite Transactions Tape (or, if no sale price is reported on any day, the average of the high and low bid prices on such day) of a share of Liberty Media Common Stock on each trading day (the "Liberty Media Average Market Price") ---------------------------------- during the period commencing on the twentieth trading day prior to the Option Closing Date and ending on the fifth trading day prior to the Option Closing Date (the "Liberty ------- Media Shares") or (ii) in the case of the Post-Option Closing, ------------ the Post-Option Purchase Price by the Liberty Media Average Market Price during the period commencing on the twentieth trading day prior to the Post-Option Closing Date and ending on the fifth trading day prior to the Post-Option Closing Date (the "Post-Option Liberty Media Shares"); -------------------------------- (ii) a receipt for the PBV Units or the Post-Option PBV Units, as applicable; and (iii) the certificates and other documents required to be delivered pursuant to Section 7.2(b). 10 (c) In the event that at the time Purchaser or Liberty Digital exercises the Option or the Post-Option or at the applicable Closing, the Liberty Digital Common Stock and/or the Liberty Media Common Stock is no longer traded on any national securities exchange or through the Nasdaq National Market, then Purchaser shall pay the Option Purchase Price or Post- Option Purchase Price in cash or the security described above that continues to be traded on a national securities exchange or through Nasdaq. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company hereby represents and warrants to Purchaser and solely with respect to Sections 3.4, 3.11, 3.12, 3.18 and 3.20, to Liberty Digital, as follows: SECTION 3.1 Organization, Good Standing and Qualification. The Company and --------------------------------------------- each of its Subsidiaries (as defined below) is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted, except for any failures by any of the Company's Subsidiaries to be so organized, qualified or in good standing as would not, either individually or in the aggregate, have a Material Adverse Effect (as defined below) with respect to the Company. The Company has all requisite corporate power and authority to execute and deliver this Agreement and the applicable Registration Rights Agreement in the form of Exhibit A attached hereto (the "Registration Rights Agreement"), to consummate ----------------------------- the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The Company and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation or other entity in all jurisdictions in which the character or location of its activities and of the properties owned or operated by it makes such qualification necessary, except for any such failures to be so qualified, authorized or in good standing as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. The Company has provided to Purchaser a complete and correct copy of its Certificate of Incorporation, as amended (the "Certificate"), and of its Amended and ----------- Restated Bylaws (the "Bylaws"), in each case as amended through the date hereof. ------ For the purposes of this Agreement, "Material Adverse Effect" with respect ----------------------- to any party shall mean a material adverse effect (i) on the business, operations, properties, assets, liabilities, financial condition or results of operations of such party and its Subsidiaries, taken as a whole, other than any effect resulting from general changes in economic conditions or the securities market generally, or (ii) on the ability of such party to perform its obligations under this Agreement and the applicable Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby. 11 SECTION 3.2 Subsidiaries. As used herein, "Subsidiary" means (i) any ------------ ---------- corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, are owned by another entity, either directly or indirectly, and (ii) any joint venture, general or limited partnership, limited liability company or other legal entity in which an entity is the record or beneficial owner, directly or indirectly, of a majority of the economic or voting interests or is the general partner. All shares of capital stock or other equity interests of any Subsidiary directly or indirectly owned by the Company have been duly authorized and validly issued, are fully paid and nonassessable and are directly or indirectly owned by the Company free and clear of any Encumbrance and have not been issued in violation of, nor subject to, any preemptive, subscription or other similar rights. "Encumbrance" means any security interest, pledge, ----------- mortgage, lien (statutory or other), charge, option to purchase, lease, claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement or other encumbrance of any kind or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement). SECTION 3.3 Capitalization; Voting Rights. (a) As of the date hereof, the ----------------------------- authorized capital of the Company consists of 250,000,000 shares of Common Stock and 50,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"), of which (i) 2,000,000 were designated $10.00 Series D --------------- Exchangeable Preferred Stock (the "Series D Preferred Stock"), (ii) 1,250,000 ------------------------ were designated $9.20 Series F Exchangeable Preferred Stock (the "Series F -------- Preferred Stock"), and (iii) 2,500,000 were designated $8.625 Series H - --------------- Exchangeable Preferred Stock (the "Series H Preferred Stock"). ------------------------ (b) As of the close of business on March 28, 2000, (i) 148,607,539 shares of Common Stock were issued and outstanding, (ii) 2,146,746 shares of Common Stock were being held in treasury, and (iii) 2,000,000 shares of Series D Preferred Stock, 1,250,000 shares of Series F Preferred Stock, and 2,500,000 shares of Series H Preferred Stock, were issued and outstanding. (c) All issued and outstanding shares of the Company's capital stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, (iii) were issued, offered and sold in compliance with all applicable state and federal laws concerning the issuance, offer and sale of securities and (iv) were not issued in violation of, or subject to, any preemptive, subscription or other similar rights of any other Person (as defined below). (d) Except as set forth on Schedule 3.3(d) or in the Company's SEC Reports (as hereinafter defined), as of the date hereof, there are no outstanding subscriptions, options, calls, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company or any of its Subsidiaries of any of their securities, nor has the Company taken or agreed to take any action to issue or grant the same. Except as described in this Agreement or set forth on Schedule 3.3(d), as of the date hereof, (x) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any securities of the Company or any voting or equity securities or interests of any of its Subsidiaries, (y) there are 12 no voting trust, proxy, stockholder or other agreements or understandings to which the Company or any of its Subsidiaries or, to the knowledge of the Company, any of its stockholders is a party or is bound with respect to the voting or transfer of the capital stock or other voting securities of the Company or any of its Subsidiaries and (z) there are no other subscriptions, options, calls, warrants or other rights (including registration rights, whether demand or piggyback registration rights), agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party. Except as set forth on Schedule 3.3(d), the consummation of the transactions contemplated by this Agreement and the applicable Registration Rights Agreement will not trigger the anti-dilution provisions or other price adjustment mechanisms of any subscriptions, options, calls, warrants, commitments, contracts, preemptive rights, rights of first refusal, demands, conversion rights or other agreements or arrangements of any character or nature whatsoever outstanding on the date hereof under which the Company is obligated to issue or acquire shares of any of its capital stock. The sale of the Shares is not and will not be subject to any preemptive rights, rights of first refusal, subscription or similar rights that have not been properly waived. (e) The Shares have been duly and validly authorized and when the Shares are issued and sold in accordance with the provisions of this Agreement, such shares will be duly authorized, validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive, subscription or other similar rights of any Person and will be delivered to Purchaser free and clear of all Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of Purchaser). (f) The Warrants have been duly and validly authorized and when the Warrants are issued in accordance with the provisions of this Agreement, the Warrants will be duly authorized, validly issued and will be the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Warrant Agreements subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. The Warrant Shares have been duly and validly authorized and when the Warrant Shares are issued upon exercise of the Warrants in accordance with the term thereof, such shares will be duly authorized, validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive, subscription or other similar rights of any Person and will be delivered to Purchaser free and clear of all Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of Purchaser). SECTION 3.4 Requisite Power and Authority. All corporate action on the ----------------------------- part of the Company, its officers, directors and stockholders necessary for the execution and delivery of this Agreement, the Warrant Agreement, and the applicable Registration Rights Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all obligations of the Company hereunder and thereunder has been taken or will be taken prior to the Purchase Closing. This Agreement has been, and the Warrant Agreement and the applicable 13 Registration Rights Agreement will be, duly executed and delivered by the Company. This Agreement is and the Warrant Agreement and the applicable Registration Rights Agreement (assuming due execution and delivery by Purchaser and/or Liberty Digital) will be legal, valid and binding obligations of the Company enforceable against it in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. SECTION 3.5 SEC Reports; Financial Statements. (a) The Company has filed --------------------------------- with the U.S. Securities and Exchange Commission (the "SEC") all forms, reports, schedules, proxy statements (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the "SEC Reports") required to be filed by the Company with the SEC since ----------- January 1, 1998. As of its date of filing, each of the Company's SEC Reports complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the Securities Act of ------------ 1933, as amended (the "Securities Act"), and the rules and regulations -------------- promulgated thereunder, and none of such SEC Reports (including any and all financial statements included therein) contained when filed or (except to the extent revised or superceded by a subsequent filing with the SEC prior to the date hereof) contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (b) Each of the consolidated financial statements (including the notes thereto) included in the Company's SEC Reports complied as to form, as of its date of filing with the SEC, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, has been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved ---- (except as may be indicated in the notes thereto) and fairly presents in all material respects 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 financial statements) to normal year-end adjustments and any other adjustments described therein or in the notes or schedules thereto which are not expected to be material. SECTION 3.6 Undisclosed Liabilities. Except for (i) those liabilities that ----------------------- are fully reflected or reserved for in the audited consolidated balance sheet of the Company included in its Annual Report on Form 10-K for the fiscal year ended December 31, 1999 as filed with the SEC, and (ii) liabilities incurred since December 31, 1999 in the ordinary course of business consistent with past practice, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature whatsoever (whether accrued, absolute, contingent or otherwise) that are material to the consolidated financial position of the Company which would be required to be set forth on a balance sheet prepared in accordance with GAAP. 14 SECTION 3.7 Affiliate Agreements. (a) Except as disclosed in the Company's -------------------- SEC Reports, there are no contracts, agreements, understandings or proposed transactions between the Company or any of its Subsidiaries and any of its officers, directors or Affiliates or any family member or Affiliate thereof that would be required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC. (b) Neither the Company nor any of its Subsidiaries is, nor to the Company's knowledge is any other party to any "material contracts" within the meaning of Item 601 of Regulation S-K of the SEC (the "Material Contracts"), in ------------------ default under, or in breach or violation of, any material term or condition of any Material Contract and, to the knowledge of the Company, no event has occurred which, with the giving of notice or passage of time or both would constitute a default of such a material term or condition by the Company or any other party under any Material Contract, other than any such events as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. Other than Material Contracts which have terminated or expired in accordance with their terms, each of the Material Contracts is in full force and effect and (assuming due execution and delivery by the counterparties thereto) is a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing). SECTION 3.8 Absence of Certain Changes. (a) Except as set forth in -------------------------- Schedule 3.3(d) or as disclosed in the Company's SEC Reports filed and publicly available prior to the date hereof, since December 31, 1999, no event, change or circumstance has occurred which has had, or would reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Effect with respect to the Company. (b) Except as set forth in the Company's SEC Reports filed and publicly available prior to the date hereof, since December 31, 1999, the Company and its Subsidiaries have carried on their respective businesses only in the ordinary and usual course consistent with their past practices. SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc. The ------------------------------------------------------ Company and each of its Subsidiaries have good and marketable title to their respective properties and assets, and good title to their respective leasehold estates, in each case free and clear of any Encumbrance, other than (i) liens for current taxes not yet due and payable and (ii) possible minor Encumbrances which do not in any case materially detract from the value of the property subject thereto or materially impair the operations of the Company and its Subsidiaries, and which have not arisen other than in the ordinary course of business. The Company and each of its Subsidiaries are in compliance with all material terms of each material lease to which they are a party or are otherwise bound. All material properties, equipment and systems of the Company and its Subsidiaries are in good repair, working order and condition and are in material compliance with all applicable standards and rules imposed (a) by any governmental agency or 15 authority in which such properties, equipment and systems are located, and (b) under any agreements with customers. SECTION 3.10 Intellectual Property. The Company and its Subsidiaries own --------------------- or have a valid license to use all trademarks, trade names, service marks, copyrights and other intellectual property (collectively, "Intellectual ------------ Property") used by them in the conduct of their respective businesses, except - -------- where the failure to own or have a valid right to use any such Intellectual Property would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. Neither the Company nor any of its Subsidiaries has received any notice or other communication alleging that its usage of such Intellectual Property violates the intellectual property rights of any other person. SECTION 3.11 Compliance with Law; Other Instruments. Neither the Company -------------------------------------- nor any of its Subsidiaries is in violation or default of (i) the Certificate or Bylaws or the organizational documents of any Subsidiary or (ii) of any judicial or administrative judgment, decision, decree, order, settlement, injunction, writ, stipulation, determination or award (each, an "Order") or any statute, ----- law, ordinance, rule or regulation (each, a "Law") and has received no notice --- of, and to the knowledge of the Company, no investigation or review is in process or threatened by any governmental authority with respect to, any violation or alleged violation of any Order or Law except, in the case of any Order or Law, where such violation or default would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. The execution, delivery and performance of this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement, and the consummation of the transactions contemplated hereby (including the grant of the Option and the Post-Option and sale of the PBV Units or the Post-Option PBV Units upon exercise of the Option or the Post-Option, respectively) and thereby, will not result in (i) any violation, or be in conflict with or constitute a default (with or without notice or lapse of time or both) under the Certificate or Bylaws or the organizational documents of any Subsidiary, (ii) any violation, or be in conflict with or constitute a default (with or without notice or lapse of time or both) under, any term or provision of, or any right of termination, cancellation or acceleration arising under any Material Contract, (iii) any violation under any Order or Law applicable to the Company or any of its Subsidiaries, its business or operations or any of its assets or properties or (iv) result in the imposition of any Encumbrance on the business or material properties or assets of the Company or any of its Subsidiaries, except, in the case of the foregoing clauses (ii), (iii) and (iv), where such violation, default, investigation or review would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. The execution, delivery and performance of this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement do not, and the consummation of the transactions contemplated hereby (including the grant of the Option and sale of the PBV Units upon the exercise of the Option) and thereby will not, require any consent, approval, authorization or other action by, or filing with or notification to, any governmental or regulatory authority or any other person, except as described on Schedule 3.11 and except where the failure to obtain any such consent, approval, authorization or other action or to make such filing or notification would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. 16 SECTION 3.12 Litigation. Except as described in the Company's SEC Reports ---------- filed and publicly available prior to the date hereof, there is no claim, action, suit, audit, assessment, arbitration or inquiry, or any proceeding or, to the Company's knowledge, investigation, by or before any governmental authority (each, an "Action") pending, or to the Company's knowledge, currently ------ threatened against the Company or any Subsidiary which would, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. SECTION 3.13 Tax Matters. (a) Except as set forth on Schedule 3.13 and ----------- except for such matters as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company, (i) all material Tax Returns (as defined below) that are required to be filed by or with respect to the Company and its Subsidiaries have been duly filed with the appropriate governmental agencies on or prior to the respective due dates (including any extensions thereof) for such Tax Returns, (ii) all material Taxes (as defined below) of the Company and its Subsidiaries due and payable, whether or not shown on the Tax Returns referred to in clause (i), have been paid in full, (iii) the Tax Returns referred to in clause (i) have been audited by the Internal Revenue Service or the appropriate state, local or foreign taxing authority or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (iv) all material deficiencies asserted or assessments made as a result of such examinations have been paid in full, (v) no material issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in clause (i) are currently pending, (vi) no waiver of statutes of limitation have been given by or requested with respect to any Taxes of the Company or its Subsidiaries, (vii) there are no liens for Taxes on any asset of the Company or any of its Subsidiaries other than for current Taxes not yet due and payable, or if due, (A) not delinquent or (B) being contested in good faith by appropriate proceedings and (viii) no consent has been filed relating to the Company or any of its Subsidiaries pursuant to Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"). ---- (b) For purposes of this Agreement, the term (i) "Taxes" means all taxes, ----- charges, fees, levies, penalties or other assessments imposed by any United States federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, excise, property, sales and use, transfer, franchise, employment, payroll, withholding, social security or other taxes, including any interest, penalties or additions attributable thereto, and (ii) "Tax Return" means any return, report, information return or other document ---------- (including any related or supporting information) filed or required to be filed with any taxing authority with respect to Taxes. SECTION 3.14 Employees. Neither the Company nor any of its Subsidiaries --------- has any collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the knowledge of the Company or any of its Subsidiaries, threatened with respect to the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company or any of its Subsidiaries, nor does the Company or any of its Subsidiaries have a present intention to terminate the employment of any 17 officer, key employee or group of key employees. No employee of the Company or its Subsidiaries is bound by any contract, agreement or covenant that would interfere or conflict with or restrict in any way his or her full provision of services thereto, including any of the foregoing relating to trade secrets, confidential information or other Intellectual Property. SECTION 3.15 Environmental and Safety Laws. (a) Except as would not, ----------------------------- either individually or in the aggregate, have a Material Adverse Effect with respect to the Company, neither the Company nor any of its Subsidiaries has failed to comply in any material respect with any Environmental Laws (as defined below). (b) Except as would not, individually or in the aggregate, have a Material Adverse Effect with respect to the Company, neither the Company nor any of its Subsidiaries has Released (as defined below), generated or disposed of any Hazardous Substance (as defined below) in a manner which could reasonably be expected to give rise to a material liability under or relating to any Environmental Laws. (c) Except as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company, there is no claim under or relating to Environmental Laws pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or, to the knowledge of the Company, pending or threatened against any other Person whose liability for any environmental claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law. Except as would not reasonably be expected to give rise to a material liability under or relating to any Environmental Laws, no real property currently or formerly owned, operated or leased by the Company or any of its Subsidiaries has been impacted by any Release or threatened Release of any Hazardous Substance. (d) For purposes of this Agreement, the term (i) "Environmental Laws" ------------------ means all applicable federal, foreign, state, local or municipal Laws or Orders or other legally binding requirements relating to pollution or the protection of human health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C., Section 9601, et seq., as amended ("CERCLA"), the Resource Conservation and ------ Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended, the Clean Water Act, 33 U.S.C. Section et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651, et seq.; (ii) "Hazardous Substances" means any pollutant, contaminant, toxic substance, -------------------- hazardous waste, hazardous material, or hazardous substance, or any oil, petroleum or petroleum product, each as defined or listed in, or classified pursuant to, any Environmental Laws or any other substance or force that could result in liability under any Environmental Laws; and (iii) "Release" means any ------- spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing (including, without limitation, the abandonment or discarding of barrels, containers and other receptacles). SECTION 3.16 Offering Valid. Assuming the accuracy of the representations -------------- and warranties of the Purchaser contained in Section 4.2 hereof, no registration under the 18 Securities Act of the Shares or the Warrants is required for the offer, sale and issuance of the Shares or the Warrants as contemplated hereby or the issuance of the Warrant Shares upon exercise of the Warrants. SECTION 3.17 Permits. The Company and its Subsidiaries hold all licenses, ------- permits, orders, consents, approvals, registrations, authorizations, qualifications and filings with and under all federal, state, local or foreign laws and governmental authorities and all industry or other non-governmental self-regulatory organizations (each, a "Permit") necessary for the lawful ------ conduct of their respective businesses as they are presently being conducted, except where the failure to so hold Permits would not, either individually or in the aggregate, have a Material Adverse Effect with respect to the Company. All Permits are in full force and effect in all material respects. The Company and its Subsidiaries have complied in all material respects with the terms of the Permits and there are no pending modifications, amendments or revocations of any Permits. All fees due and payable from the Company or any of its Subsidiaries to governmental authorities or other third parties pursuant to the Permits have been paid. There are no pending or, to the knowledge of the Company, threatened, suits, actions, proceedings or, to the Company's knowledge, investigations with respect to the possible revocation, cancellation, suspension, limitation or nonrenewal of any Permits, and there has occurred no event which (whether with notice or lapse of time or both) could reasonably be expected to result in or constitute the basis for such a revocation, cancellation, suspension, limitation or nonrenewal thereof. SECTION 3.18 No Broker. Neither the Company nor any of its Subsidiaries --------- has employed any broker or finder, or incurred any liability for any brokerage or finders' fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement. SECTION 3.19 Organization, Good Standing and Qualification of PBV. PBV is ---------------------------------------------------- a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted. PBV has all requisite corporate power and authority to execute and deliver the applicable Registration Rights Agreement, to consummate the transactions contemplated thereby and to perform its obligations thereunder. PBV is duly qualified and is authorized to do business and is in good standing as a foreign corporation or other entity in all jurisdictions in which the character or location of its activities and of the properties owned or operated by it makes such qualification necessary, except for any such failures to be so qualified, authorized or in good standing as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to PBV. The Company has provided to Liberty Digital a complete and correct copy of PBV's organizational documents, in each case as amended through the date hereof. SECTION 3.20 Investment Representations. The Company acknowledges that the -------------------------- LDIG Purchase Shares have not been registered under the Securities Act or under any state securities laws. The Company (a) is acquiring the LDIG Purchase Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, (b) is an "accredited investor" within the meaning of Regulation D, 19 Rule 501(a), promulgated by the SEC, (c) acknowledges that the LDIG Purchase Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available and (d) represents that by reason of its business or financial experience, the Company has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement and the applicable Registration Rights Agreement. The Company acknowledges that it has had an opportunity to discuss Liberty Digital's business, management and financial affairs with Liberty Digital's management. The Company acknowledges that it has had an opportunity to ask questions of and receive answers from officers of Liberty Digital. The Company understands that such discussions, as well as any other written information issued by Liberty Digital, were intended to describe certain aspects of Liberty Digital's business and operations, but were not an exhaustive description. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER ------------------------------------------- Purchaser hereby represents and warrants to the Company as follows: SECTION 4.1 Requisite Power and Authority. Purchaser has all requisite ----------------------------- power and authority to execute and deliver this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. All corporate action on Purchaser's part necessary for the execution and delivery of this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all obligations of Purchaser hereunder and thereunder has been or will be taken prior to the Purchase Closing. This Agreement has been and the Warrant Agreement and the applicable Registration Rights Agreement will be, duly executed and delivered by Purchaser. This Agreement, the Warrant Agreement and the applicable Registration Rights Agreement (assuming due execution and delivery by the Company and/or Liberty Digital) will be legal, valid and binding obligations of Purchaser, enforceable against it in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. SECTION 4.2 Investment Representations. Purchaser acknowledges that the -------------------------- Shares, the Warrants and the Warrant Shares have not been registered under the Securities Act or under any state securities laws. Purchaser (a) is acquiring the Shares, the Warrants and the Warrant Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, (b) is an "accredited investor" within the meaning of Regulation D, Rule 501(a), promulgated by the SEC, (c) acknowledges that the Shares, the Warrants and the Warrant Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available and (d) represents that by reason of its business or 20 financial experience, Purchaser has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement and the applicable Registration Rights Agreement. Purchaser acknowledges that it has had an opportunity to discuss the Company's business, management and financial affairs (including the business, management and financial affairs of PBV) with the Company's management. Purchaser acknowledges that it has had an opportunity to ask questions of and receive answers from officers of the Company. Purchaser understands that such discussions, as well as any other written information issued by the Company, were intended to describe certain aspects of the Company's business and operations, but were not an exhaustive description. SECTION 4.3 Litigation. Except as set forth in the Purchaser's SEC Reports ---------- filed and publicly prior to the date hereof, there is no Action pending, or to Purchaser's knowledge, currently threatened against Purchaser which, would, individually or in the aggregate, have a Material Adverse Effect with respect to Purchaser. SECTION 4.4 No Broker. Purchaser has not employed any broker or finder, or --------- incurred any liability for any brokerage or finders' fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES OF LIBERTY DIGITAL ------------------------------------------------- Liberty Digital hereby represents and warrants to the Company as follows: SECTION 5.1 Organization, Good Standing and Qualification. Liberty Digital --------------------------------------------- and each of its Subsidiaries is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted, except for any failures by any of Liberty Digital's Subsidiaries to be so organized, qualified or in good standing as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. Liberty Digital has all requisite corporate power and authority to execute and deliver this Agreement and the applicable Registration Rights Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. Liberty Digital and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation or other entity in all jurisdictions in which the character or location of its activities and of the properties owned or operated by it makes such qualification necessary, except for any such failures to be so qualified, authorized or in good standing as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. Liberty Digital has provided to the Company a complete and correct copy of its Certificate of Incorporation, as amended (the "Liberty Certificate"), and of its ------------------- Bylaws (the "Liberty Bylaws"), in each case as amended through the date hereof. -------------- 21 SECTION 5.2 Subsidiaries. All shares of capital stock or other equity ------------ interests of any Subsidiary directly or indirectly owned by Liberty Digital have been duly authorized and validly issued, are fully paid and nonassessable and are directly or indirectly owned by Liberty Digital free and clear of any Encumbrance and have not been issued in violation of, nor subject to, any preemptive, subscription or other similar rights. SECTION 5.3 Capitalization; Voting Rights. (a) The authorized capital ----------------------------- stock of Liberty Digital consists of (i) 1,755,000,000 shares of common stock, par value $.01 per share, of which (A) 1,000,000,000 shares are LDIG Common Stock and (B) 755,000,000 shares are Series B common stock ("LDIG Series B Stock") and (ii) 5,000,000 shares of preferred stock, par value $.01 per share, of which 150,000 shares are designated as Class B Preferred Stock ("LDIG Preferred Stock"). (b) As of the close of business on January 31, 2000 (i) 26,638,479 shares of LDIG Common Stock and 171,950,167 shares of LDIG Series B Stock were issued and outstanding, respectively, (ii) no shares of LDIG Common Stock were in treasury, (iii) 171,950,167 shares of LDIG Common Stock were reserved for issuance upon conversion of shares of LDIG Series B Stock, (iv) 25,764,600 shares of LDIG Series B Stock was reserved for issuance upon conversion of the LDIG Preferred Stock, and (v) 150,000 shares of LDIG Preferred Stock were issued and outstanding. As of December 31, 1999, 2,514,531 shares of LDIG Common Stock were reserved for future issuance to employees pursuant to outstanding stock options under Liberty Digital's stock option plans. (c) All issued and outstanding shares of Liberty Digital's capital stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, (iii) were issued, offered and sold in compliance with all applicable state and federal laws concerning the issuance, offer and sale of securities and (iv) were not issued in violation of, or subject to, any preemptive, subscription or other similar rights of any other Person. (d) Except as set forth in Liberty Digital's SEC Reports, as of the date hereof, (x) there are no outstanding obligations of Liberty Digital or any of its Subsidiaries to repurchase, redeem or otherwise acquire any securities of Liberty Digital or any voting or equity securities or interests of any of its Subsidiaries, and (y) there are no voting trust, proxy, stockholder or other agreements or understandings to which Liberty Digital or any of its Subsidiaries or, to the knowledge of Liberty Digital, any of its stockholders is a party or is bound with respect to the voting or transfer of the capital stock or other voting securities of Liberty Digital or any of its Subsidiaries. The consummation of the transactions contemplated by this Agreement and the applicable Registration Rights Agreement will not trigger the anti-dilution provisions or other price adjustment mechanisms of any subscriptions, options, calls, warrants, commitments, contracts, preemptive rights, rights of first refusal, demands, conversion rights or other agreements or arrangements of any character or nature whatsoever outstanding on the date hereof under which Liberty Digital is or may be obligated to issue or acquire shares of any of its capital stock. The sale of the LDIG Shares is not and will not be subject to any preemptive rights, rights of first refusal, subscription or similar rights that have not been properly waived. 22 (e) The LDIG Purchase Shares have been duly and validly authorized and when the LDIG Purchase Shares are issued and sold in accordance with the provisions of this Agreement and the Option, such shares will be duly authorized, validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive, subscription or other similar rights of any Person and will be delivered to the Company free and clear of all Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of the Company). SECTION 5.4 Authorization; Binding Obligations. All corporate action on ---------------------------------- the part of Liberty Digital, its officers, directors and stockholders necessary for the execution and delivery of this Agreement and the applicable Registration Rights Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all obligations of Liberty Digital hereunder and thereunder has been taken or will be taken prior to the Purchase Closing. This Agreement has been, and the applicable Registration Rights Agreement will be, duly executed and delivered by Liberty Digital. This Agreement is and the applicable Registration Rights Agreement (assuming due execution and delivery by the Company and Purchaser) will be legal, valid and binding obligations of Liberty Digital enforceable against it in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. SECTION 5.5 SEC Reports; Financial Statements. (a) Liberty Digital has --------------------------------- filed with the SEC all SEC Reports required to be filed by Liberty Digital with the SEC since January 1, 1998. As of its date of filing, each of Liberty Digital's SEC Reports complied in all material respects with the requirements of the Exchange Act or the Securities Act, and the rules and regulations promulgated thereunder, and none of such SEC Reports (including any and all financial statements included therein) contained when filed or (except to the extent revised or superceded by a subsequent filing with the SEC prior to the date hereof) contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (b) Each of the consolidated financial statements (including the notes thereto) included in Liberty Digital's SEC Reports complied as to form, as of its date of filing with the SEC, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, has been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presents in all material respects the consolidated financial position of Liberty Digital 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 financial statements) to normal year-end adjustments and any other adjustments described therein or in the notes or schedules thereto which are not expected to be material. 23 SECTION 5.6 Undisclosed Liabilities. Except for (i) those liabilities that ----------------------- are fully reflected or reserved for in the audited consolidated balance sheet of Liberty Digital as of December 31, 1999 and (ii) liabilities incurred since December 31, 1999 in the ordinary course of business consistent with past practice, neither Liberty Digital nor any of its Subsidiaries has any liabilities or obligations of any nature whatsoever (whether accrued, absolute, contingent or otherwise) that are material to the consolidated financial position of Liberty Digital which would be required to be set forth on a balance sheet prepared in accordance with GAAP. SECTION 5.7 Affiliate Agreements. (a) Except as disclosed in Liberty -------------------- Digital's SEC Reports, there are no contracts, agreements, understandings or proposed transactions between Liberty Digital or any of its Subsidiaries and any of its officers, directors or Affiliates or any family member or Affiliate thereof that would be required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC. (b) Neither Liberty Digital nor any of its Subsidiaries is, nor to Liberty Digital's knowledge is any other party to any Material Contract, in default under, or in breach or violation of, any material term or condition of any Material Contract and, to the knowledge of Liberty Digital, no event has occurred which, with the giving of notice or passage of time or both would constitute a default of such a material term or condition by Liberty Digital or any other party under any Material Contract, other than such events as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. Other than Material Contracts which have terminated or expired in accordance with their terms, each of the Material Contracts is in full force and effect and (assuming due execution and delivery by the counterparties thereto) is a legal, valid and binding obligation of Liberty Digital enforceable against Liberty Digital in accordance with its terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing). SECTION 5.8 Absence of Certain Changes. (a) Except as disclosed in Liberty -------------------------- Digital's SEC Reports filed and publicly available prior to the date hereof, since December 31, 1999, no event, change or circumstance has occurred which has had, or would reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Effect with respect to Liberty Digital. (b) Except as set forth in Liberty Digital's SEC Reports filed and publicly available prior to the date hereof, since December 31, 1999, Liberty Digital and its Subsidiaries have carried on their respective businesses only in the ordinary and usual course consistent with their past practices. SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc. Liberty ------------------------------------------------------ Digital and each of its Subsidiaries have good and marketable title to their respective properties and assets, and good title to their respective leasehold estates, in each case free and clear of any Encumbrance, other than (i) liens for current taxes not yet due and payable and (ii) possible minor Encumbrances which do not in any case materially detract from the value of the property 24 subject thereto or materially impair the operations of Liberty Digital and its Subsidiaries, and which have not arisen other than in the ordinary course of business. Liberty Digital and each of its Subsidiaries are in compliance with all material terms of each material lease to which they are a party or are otherwise bound. All material properties, equipment and systems of Liberty Digital and its Subsidiaries are in good repair, working order and condition and are in material compliance with all applicable standards and rules imposed (a) by any governmental agency or authority in which such properties, equipment and systems are located, and (b) under any agreements with customers. SECTION 5.10 Intellectual Property. Liberty Digital and its Subsidiaries --------------------- own or have a valid license to use all Intellectual Property used by them in the conduct of their respective businesses, except where the failure to own or have a valid right to use any such Intellectual Property would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. Neither Liberty Digital nor any of its Subsidiaries has received any notice or other communication alleging that its usage of such Intellectual Property violates the intellectual property rights of any other person. SECTION 5.11 Compliance with Law; Other Instruments. Neither Liberty -------------------------------------- Digital nor any of its Subsidiaries is in violation or default of (i) the Liberty Certificate or Liberty Bylaws or the organizational documents of any Subsidiary or (ii) any Order or Law and has received no notice of, and to the knowledge of Liberty Digital, no investigation or review is in process or threatened by any governmental authority with respect to, any violation or alleged violation of any Order or Law except, in the case of any Order or Law, where such violation or default would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. The execution, delivery and performance of this Agreement and the applicable Registration Rights Agreement, and the consummation of the transactions contemplated hereby (including the grant and any exercise of the Option) and thereby, will not result in (i) any violation, or be in conflict with or constitute a default (with or without notice or lapse of time or both) under the Liberty Certificate or Liberty Bylaws or the organizational documents of any Subsidiary, (ii) any violation, or be in conflict with or constitute a default (with or without notice or lapse of time or both) under, any term or provision of, or any right of termination, cancellation or acceleration arising under any Material Contract, (iii) any violation under any Order or Law applicable to Liberty Digital or any of its Subsidiaries, its business or operations or any of its assets or properties or (iv) result in the imposition of any Encumbrance on the business or material properties or assets of Liberty Digital or any of its Subsidiaries, except, in the case of the foregoing clauses (ii), (iii) and (iv), where such violation, default, investigation or review would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. The execution, delivery and performance of this Agreement and the applicable Registration Rights Agreement do not, and the consummation of the transactions contemplated hereby (including the grant of the Option and the any exercise of the Option) and thereby will not, require any consent, approval, authorization or other action by, or filing with or notification to, any governmental or regulatory authority or any other person, and except where the failure to obtain any such consent, approval, authorization or other action or to make such filing or notification would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. 25 SECTION 5.12 Litigation. Except as set forth in Liberty Digital's SEC ---------- Reports filed and publicly available prior to the date of this Agreement, there is no Action pending, or to Liberty Digital's knowledge, currently threatened against Liberty Digital or any Subsidiary which would, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. SECTION 5.13 Tax Matters. Except as set forth in a letter delivered to the ----------- Company on or before April 5, 2000 and except for such matters as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital, (i) all material Tax Returns that are required to be filed by or with respect to Liberty Digital and its Subsidiaries and each affiliated group (within the meaning of Section 1504(a) of the Code) of which they are members (an "Affiliated Group") have been duly filed with the appropriate governmental agencies on or prior to the respective due dates (including any extensions thereof) for such Tax Returns, (ii) all material Taxes of Liberty Digital, its Subsidiaries and any Affiliated Group due and payable, whether or not shown on the Tax Returns referred to in clause (i), have been paid in full, (iii) the Tax Returns referred to in clause (i) have been audited by the Internal Revenue Service or the appropriate state, local or foreign taxing authority or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (iv) all material deficiencies asserted or assessments made as a result of such examinations have been paid in full, (v) no material issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in clause (i) are currently pending, (vi) no waiver of statutes of limitation have been given by or requested with respect to any Taxes of Liberty Digital, its Subsidiaries or any Affiliated Group, (vii) there are no liens for Taxes on any asset of Liberty Digital or any of its Subsidiaries other than for current Taxes not yet due and payable, or if due, (A) not delinquent or (B) being contested in good faith by appropriate proceedings and (viii) no consent has been filed relating to Liberty Digital or any of its Subsidiaries pursuant to Section 341(f) of the Code. SECTION 5.14 Employees. Neither Liberty Digital nor any of its --------- Subsidiaries has any collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the knowledge of Liberty Digital or any of its Subsidiaries, threatened with respect to Liberty Digital or any of its Subsidiaries. Neither Liberty Digital nor any of its Subsidiaries is aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with Liberty Digital or any of its Subsidiaries, nor does Liberty Digital or any of its Subsidiaries have a present intention to terminate the employment of any officer, key employee or group of key employees, except that Liberty Digital has announced the closure of its New York office. No employee of Liberty Digital or its Subsidiaries is bound by any contract, agreement or covenant that would interfere or conflict with or restrict in any way his or her full provision of services thereto, including any of the foregoing relating to trade secrets, confidential information or other Intellectual Property. SECTION 5.15 Environmental and Safety Laws. (a) Except as would not, ----------------------------- either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital, neither Liberty Digital nor any of its Subsidiaries has failed to comply in any material respect with any Environmental Laws. 26 (b) Except as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital, neither Liberty Digital nor any of its Subsidiaries has Released, generated or disposed of any Hazardous Substance in a manner which could reasonably be expected to give rise to a material liability under or relating to any Environmental Laws. (c) Except as would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital, there is no claim under or relating to Environmental Laws pending or, to the knowledge of Liberty Digital, threatened against Liberty Digital or any of its Subsidiaries or, to the knowledge of Liberty Digital, pending or threatened against any other Person whose liability for any environmental claim Liberty Digital or any of its Subsidiaries has retained or assumed either contractually or by operation of law. Except as would not reasonably be expected to give rise to a material liability under or relating to any Environmental Laws, no real property currently or formerly owned, operated or leased by Liberty Digital or any of its Subsidiaries has been impacted by any Release or threatened Release of any Hazardous Substance. SECTION 5.16 Offering Valid. Assuming the accuracy of the representations -------------- and warranties of the Company contained in Section 3.20 hereof, no registration under the Securities Act of the LDIG Purchase Shares is required for the offer, sale and issuance of the LDIG Purchase Shares as contemplated hereby. SECTION 5.17 Permits. Liberty Digital and its Subsidiaries hold all ------- Permits necessary for the lawful conduct of their respective businesses as they are presently being conducted, except where the failure to so hold Permits would not, either individually or in the aggregate, have a Material Adverse Effect with respect to Liberty Digital. All Permits are in full force and effect in all material respects. Liberty Digital and its Subsidiaries have complied in all material respects with the terms of the Permits and there are no pending modifications, amendments or revocations of any Permits. All fees due and payable from Liberty Digital or any of its Subsidiaries to governmental authorities or other third parties pursuant to the Permits have been paid. There are no pending or, to the knowledge of Liberty Digital, threatened, suits, actions, proceedings or, to Liberty Digital's knowledge, investigations with respect to the possible revocation, cancellation, suspension, limitation or nonrenewal of any Permits, and there has occurred no event which (whether with notice or lapse of time or both) could reasonably be expected to result in or constitute the basis for such a revocation, cancellation, suspension, limitation or nonrenewal thereof. SECTION 5.18 No Broker. Neither Liberty Digital nor any of its --------- Subsidiaries has employed any broker or finder, or incurred any liability for any brokerage or finders' fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement. 27 ARTICLE VI ADDITIONAL AGREEMENTS --------------------- SECTION 6.1 Access. (a) During the period from the date of this Agreement ------ until the earlier to occur of the Option Closing Date or the Option Expiration Date, each of the Company and Liberty Digital shall, and shall cause its Subsidiaries, officers, directors, employees, auditors and other agents to, (a) afford the officers, employees, auditors and other agents of the other parties hereto, during normal business hours reasonable access at all reasonable times to its officers, employees, auditors, legal counsel, properties, offices, plants and other facilities and to all books and records, (b) furnish the other parties with all financial, operating and other data and information as such party, through its officers, employees or agents, may from time to time reasonably request and (c) afford the other parties the opportunity to discuss its affairs, finances and accounts (including, in the case of the Company, the affairs, finances and accounts of PBV and of the Subsidiaries the assets of which are to be covered (in whole of in part) by the License Agreement) with its officers on a regular basis. (b) Each of the parties hereto agrees that it shall keep all information furnished to it pursuant to Section 6.1(a) or otherwise by any other party hereto regarding such party's business or operations, and any analyses, compilations, forecasts, and/or other documents prepared by the receiving party containing or based in whole or in part on any such furnished information (collectively, the "Information"), confidential and will not publicly disclose ----------- any of the Information except (i) as may be consented to by the furnishing party and (ii) as required by law, regulation or legal or judicial process; provided, -------- that where such disclosure is required, the receiving party shall provide the furnishing party with a reasonable opportunity to review the disclosure, to the extent practicable before it is made, and to interpose its own objections to, or seek to limit, the disclosure at its own expense. The Information does not include any information which (i) is or becomes publicly available other than as a result of a disclosure by any receiving party hereunder, (ii) is already in any party's possession, provided that such information is not known by such party to be subject to any legal or contractual obligation of confidentiality owed to the furnishing party, (iii) is or becomes available to any receiving party on a non-confidential basis from a source other than the furnishing party (provided, that such source is not known by the receiving party to be subject to -------- any legal or contractual obligation to the furnishing party to keep such information confidential), or (iv) is independently developed by any party hereto without violating any of its obligations under this Section 6.1. SECTION 6.2 Efforts. (a) Each party hereto agrees to use commercially reasonable ------- efforts to take any and all actions required in order to consummate the transactions contemplated in this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement. (b) Purchaser and the Company agree to use their reasonable best efforts and to negotiate in good faith after the date hereof and prior to the Purchase Closing Date to agree on the Warrant Agreement, with the terms set forth in Exhibit B hereto and in form and substance reasonably satisfactory to each such party. 28 SECTION 6.3 Regulatory and Other Authorizations; Notices and Consents. (a) --------------------------------------------------------- Each of the parties hereto shall promptly make any and all filings which they are required to make under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), for the sale of the Shares, the Warrants, the ------- Warrant Shares, the PBV Units and the LDIG Purchase Shares and agrees to furnish the other parties hereto with such necessary information and reasonable assistance as such party may reasonably request in connection with the preparation of any necessary filings or submissions to the Federal Trade Commission ("FTC") or the Antitrust Division of the U.S. Department of Justice --- (the "Antitrust Division"), including any filings or notices necessary under the ------------------ HSR Act. Any such actions with respect to the exercise of the Option shall be taken by the Company at such times as Liberty Digital reasonably shall so request. Each of the parties hereto shall, at its own expense, use all reasonable efforts to respond to any request for additional information, or other formal or informal request for information, witnesses or documents which may be made by any governmental authority pertaining to it with respect to the sale of the Shares, the Warrants, the Warrant Shares, the PBV Units and the LDIG Purchase Shares and shall keep the other parties hereto fully apprised of its actions with respect thereto. (b) Each of the parties hereto shall use their commercially reasonable efforts to give such notices and obtain all other authorizations, consents, orders and approvals of all governmental authorities and other third parties that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement, the Warrant Agreement, the Option and the applicable Registration Rights Agreement and will cooperate fully with the other parties hereto in promptly seeking to obtain all such authorizations, consents, orders and approvals. Notwithstanding the foregoing, no party nor any of its Affiliates shall be required to dispose of any assets, or agree to any material limitations on any of its operations, as a condition to obtaining any such authorization, consent, order or approval. SECTION 6.4 Transfer Restrictions. (a) The Shares. Purchaser agrees that --------------------- it shall not, without the prior written consent of the Company, directly or indirectly sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of ("Transfer"), any of the Shares at any time prior to the first anniversary of -------- the Purchase Closing Date, other than (x) to a Subsidiary of Purchaser (a "Purchaser Permitted Transferee"); provided, that (i) the Purchaser Permitted ------------------------------ -------- Transferee must agree in writing to be bound by the terms of this Agreement and the applicable Registration Rights Agreement, and (ii) such a Transfer shall not relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a pledge of the Shares, in whole or in part, by Purchaser or such Purchaser Permitted Transferee to secure bona fide indebtedness; provided, that the -------- pledgee agrees with the Company to be bound hereby in the event of a foreclosure with the same effect as if it were named herein in lieu of Purchaser and no such pledge shall relieve Purchaser of any of its liabilities or obligations hereunder. (b) The Warrants and the Warrant Shares. Purchaser agrees that it shall not, without the prior written consent of the Company, directly or indirectly Transfer any of the Warrants or the Warrant Shares at any time prior to the first anniversary of the Purchase Closing 29 Date, other than (x) to a Purchaser Permitted Transferee; provided, that (i) the -------- Purchaser Permitted Transferee must agree in writing to be bound by the terms of this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement, and (ii) such a Transfer shall not relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a pledge of the Warrant or the Warrant Shares, in whole or in part, by Purchaser or such Purchaser Permitted Transferee to secure bona fide indebtedness; provided, that the pledgee agrees -------- with the Company to be bound hereby in the event of a foreclosure with the same effect as if it were named herein in lieu of Purchaser and no such pledge shall relieve Purchaser of any of its liabilities or obligations hereunder. (c) The LDIG Purchase Shares. The Company agrees that it shall not, without the prior written consent of Liberty Digital, directly or indirectly Transfer any of the LDIG Purchase Shares at any time prior to the first anniversary of the Purchase Closing Date, other than (x) to a Subsidiary of the Company (a "Company Permitted Transferee"); provided, that (i) the Company ---------------------------- -------- Permitted Transferee must agree in writing to be bound by the terms of this Agreement and the applicable Registration Rights Agreement, and (ii) such a Transfer shall not relieve the Company of any of its liabilities or obligations hereunder, and (y) a pledge of the LDIG Purchase Shares, in whole or in part, by the Company or such Company Permitted Transferee to secure bona fide indebtedness; provided, that the pledgee agrees with Liberty to be bound hereby -------- in the event of a foreclosure with the same effect as if it were named herein in lieu of the Company and no such pledge shall relieve the Company of any of its liabilities or obligations hereunder. (d) The PBV Units. Purchaser agrees that, in the event that Purchaser acquires the PBV Units, it shall not, without the prior written consent of PBV, Transfer any of the PBV Units at any time prior to the first anniversary of the Option Closing Date, other than (x) to a Subsidiary of Purchaser (a "Purchaser --------- Permitted Transferee"); provided, that (i) the Purchaser Permitted Transferee - -------------------- -------- must agree in writing to be bound by the terms of this Agreement and the applicable Registration Rights Agreement, and (ii) such a Transfer shall not relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a pledge of the Shares, in whole or in part, by Purchaser or such Purchaser Permitted Transferee to secure bona fide indebtedness; provided, that the -------- pledgee agrees with PBV to be bound hereby in the event of a foreclosure with the same effect as if it were named herein in lieu of Purchaser and no such pledge shall relieve Purchaser of any of its liabilities or obligations hereunder. (e) The LDIG Shares or Liberty Media Shares. The Company agrees that, in the event that the Company acquires the LDIG Shares or the Liberty Media Shares, it shall not, without the prior written consent of Purchaser, Transfer any of such shares at any time prior to the first anniversary of the Option Closing Date, other than (x) to a Company Permitted Transferee; provided, that (i) the -------- Company Permitted Transferee must agree in writing to be bound by the terms of this Agreement and the applicable Registration Rights Agreement, and (ii) such a Transfer shall not relieve the Company of any of its liabilities or obligations hereunder, and (y) a pledge of the Shares, in whole or in part, by the Company or such Company Permitted Transferee to secure bona fide indebtedness; provided, -------- that the pledgee agrees with Purchaser to be bound hereby in the event of a foreclosure with the same effect as if it were named herein in 30 lieu of the Company and no such pledge shall relieve the Company of any of its liabilities or obligations hereunder. (f) Legend. Upon original issuance thereof and until such time as the same is no longer required by the applicable requirements of the Securities Act, certificates representing the Shares, the Warrants, the Warrant Shares, the PBV Units, the LDIG Purchase Shares, the LDIG Shares, the Liberty Media Shares, the Post-Option PBV Units, the Post-Option LDIG Shares and the Post-Option Liberty Media Shares (and all securities issued in exchange or substitution therefor) shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSIONER, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR AN APPLICABLE EXCEPTION THEREFROM. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000, AMONG PRIMEDIA INC., LIBERTY MEDIA CORPORATION, AND LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH [PRIMEDIA INC.] [PRIMEDIA BROADBAND VIDEO, LLC] [LIBERTY DIGITAL, INC.][AT&T CORP.] SECTION 6.5 Registration Rights. (a) At the Purchase Closing, the Company ------------------- and Purchaser shall enter into a Registration Rights Agreement and the Company and Liberty Digital shall enter into a Registration Rights Agreement, each substantially in the form attached as Exhibit A hereto. Prior to the Purchase Closing, the parties agree to negotiate in good faith with respect to the appropriate limits on the number of shares that can be included in a demand registration with respect to the shares of Liberty Digital or PBV issued or issuable hereunder in an effort to mitigate the impact of the potential adverse affect such a registration could have on the volatility and market price of the securities subject to each such agreement. (b) At the Option Closing, (i) (x) if the Option Purchase Price is paid in LDIG Shares, the Company and Liberty Digital shall enter into a Registration Rights Agreement and (y) if the Option Purchase Price is paid in Liberty Media Shares, Purchaser shall cause AT&T to enter into a Registration Rights Agreement and (ii) PBV and Purchaser shall enter into a Registration Rights Agreement, each substantially in the form attached as Exhibit A hereto. SECTION 6.6 Further Strategic Relationships. The Company and Purchaser ------------------------------- will jointly evaluate other strategic relationships in the broadband video area. 31 SECTION 6.7 Adjustment to the Option Purchase Price or the Post-Option ---------------------------------------------------------- Purchase Price. The parties hereto agree that, if the price paid for each PBV - -------------- Unit or Post-Option PBV Unit (in each case, appropriately adjusted to reflect any recapitalization or reorganization of PBV undertaken in connection with an initial public offering of PBV) (the per unit price paid by Liberty Digital for the PBV Units or Post-Option PBV Units being herein referred to as the "Per --- Share PBV Price") exceeds one-half of the gross per share or per unit price at - --------------- which an initial public offering of PBV is consummated (the "IPO Price"), then --------- the Company shall remit to Purchaser within five business days after the closing of the initial public offering of PBV, an amount equal to the product of (A) the difference between (x) the Per Share PBV Price and (y) one-half the IPO Price, multiplied by (B) the number of PBV Units or Post-Option PBV Units (in each case, appropriately adjusted to reflect any recapitalization or reorganization of PBV undertaken in connection with an initial public offering of PBV) (the "Adjustment Value"). The payment of the Adjustment Value shall be made by the ---------------- Company, at its option, in either (i) cash or (ii) if the Option Purchase Price or Post-Option Purchase Price was paid with shares of LDIG Common Stock or Liberty Media Common Stock, by delivery of a certificate or certificates evidencing the number of shares of LDIG Common Stock or Liberty Media Common Stock, free and clear of any Encumbrances (other than those (x) imposed by federal or state securities laws or (y) placed thereon by or on behalf of Purchaser), equal to the quotient (rounded to the nearest whole number) derived by dividing the Adjustment Value by the Average Market Price of a share of LDIG Common Stock or Liberty Media Common Stock, as applicable, that was used to determine the number of LDIG Shares or Post-Option LDIG Shares, as applicable, or Liberty Media Shares or Post-Option Liberty Media Shares, as applicable, to be delivered pursuant to Section 2.3(b)(i). SECTION 6.8 Public Announcements. Neither Purchaser nor Liberty Digital, -------------------- on the one hand, nor the Company, on the other hand, will issue any press release or public statement with respect to the transactions contemplated by this Agreement without the prior written consent of the other parties hereto, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with the NYSE or Nasdaq. In addition to the foregoing, Purchaser, Liberty Digital and the Company will consult to the extent reasonably practicable with each other before issuing, and provide each other the opportunity to review and comment upon, any such press release or other public statement. The parties agree that the initial press release or releases to be issued by or on behalf of the parties with respect to the transactions contemplated by this Agreement shall be mutually agreed upon prior to the issuance thereof. SECTION 6.9 Confidentiality. No party hereto shall publicly disclose, by --------------- any means, the scope and nature of the registration rights which such party enjoys pursuant to this Agreement and the applicable Registration Rights Agreement, except as may be required by applicable law or court process. This obligation of confidentiality shall last indefinitely, regardless of the termination of this Agreement in accordance with Section 8.11 hereof. SECTION 6.10 No-Solicitation. Each of the parties hereto agrees that, --------------- during the period beginning on the date hereof and ending on the second anniversary of the Purchase Closing Date, it will not, directly or indirectly, without the prior written consent of the 32 appropriate party, (i) hire or enter into any services contract with any current officer, director or employee of any other party or any of such party's Subsidiaries, or (ii) induce or attempt to induce or otherwise counsel or encourage any current officer, director or employee of any other party or any of such party's Subsidiaries with whom such party has had contact in the course of its consideration of the transactions contemplated hereby to leave or otherwise terminate such person's relationship with his or her current employer; provided, -------- however, that the foregoing shall not (x) prohibit any such actions pursuant to a general employment advertisement published in a newspaper or other publication of general circulation, (y) prevent any party from hiring any such person who contacts it on his or her own initiative without any solicitation by or encouragement from such party or (z) prevent any party from hiring any such person who has been terminated by any other party or any of such party's Subsidiaries prior to the commencement of employment discussions. SECTION 6.11 Formation of PBV; IPO. (a) The parties agree that the assets --------------------- of PBV shall include a licensing agreement (the "Licensing Agreement"), ------------------- containing commercially reasonable terms, pursuant to which PBV shall have a non-exclusive license to utilize any and all consumer video and other assets (whether in print or any other medium), whether currently in existence or hereafter developed or acquired, of the Company and its Subsidiaries (the "Licensed Assets") for the development, promotion, distribution, sale or other --------------- exploitation of consumer-oriented broadband video, interactive video and streaming video products and services; provided, however, such assets shall not -------- ------- include the educational video assets of the Company or its Subsidiaries, including those of Channel One Corporation and Films for the Humanities and Sciences, unless the Company, in its sole discretion, elects to include such educational video assets. The exploitation of the Licensed Assets will not extend to services that have traditionally been delivered by television, cable and satellite television program services or to traditional videocassettes or similar medium. "Commercially reasonable terms" means terms, including royalties, that are no less favorable to PBV than those that could be obtained in an arm's length negotiations with unrelated third parties who are not Affiliates of the Company. (b) Commencing on the date hereof, the parties shall use their good faith and commercially reasonable efforts to, as promptly as reasonably practicable, (i) identify the assets of the Company and its Subsidiaries that are to be licensed to PBV pursuant to the License Agreement, (ii) determine the terms of the License Agreement and (iii) agree on the fair market value of the PBV Units for purposes of Section 1.3. (c) If the Option is exercised, then the Company shall use its commercially reasonable efforts (x) to cause the business of PBV to be conducted in a manner that will permit PBV to effect an underwritten public offering (an "IPO") within eighteen (18) months of the Option Closing Date and, (y) subject --- to market conditions, to cause PBV to effect an IPO within such eighteen month period and if the Option is not exercised, then the Company shall use its commercially reasonable efforts to cause the business of PBV to be conducted in a manner that will permit PBV to effect an IPO within eighteen (18) months of the Option Expiration Date and, subject to market conditions, to cause PBV to effect and IPO within such eighteen month period. Purchaser and Liberty Digital will cooperate with the efforts of the Company and PBV to effect an IPO, including with respect to any recapitalization or reorganization in connection therewith; 33 provided, that (i) such IPO consist of a primary offering of not less than 5% of - -------- the total equity of PBV, (ii) the underwriters are reasonably satisfactory to the party that has exercised the Option or the Post-Option, and (iii) the valuation of PBV that is used to determine the initial public offering price is recommended by the lead managing underwriter(s). SECTION 6.12 Listing of Shares in PBV. In the event that the Option or the ------------------------ Post-Option is exercised, following an IPO, the Company shall use its commercially reasonable efforts to cause PBV to have the PBV Units or Post-Option PBV Units, as the case may be, listed on any nationally recognized securities exchange or national quotation service on which the outstanding membership units or shares of PBV are then listed. ARTICLE VII CONDITIONS TO CLOSING --------------------- SECTION 7.1 Purchase Closing Conditions. --------------------------- (a) Obligations of Purchaser. Purchaser's obligation to purchase the ------------------------ Shares at the Purchase Closing is subject to the satisfaction (or waiver by Purchaser), on or prior to such Closing, of the following conditions: (i) Representations and Warranties True; Performance of Obligations. --------------------------------------------------------------- Each of the representations and warranties of the Company contained in this Agreement that is qualified as to materiality or Material Adverse Effect shall be true and correct, and each of the representations and warranties of the Company contained in this Agreement that is not so qualified as to materiality or Material Adverse Effect shall be true and correct in all material respects, in each case as of the Purchase Closing Date (except for those representations and warranties which address matters only as of a particular date, which shall be true and correct, or true and correct in all material respects, as the case may be, as of such date). The Company shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Purchase Closing Date (it being understood that the covenants relating to PBV and its assets shall be deemed to not be required to be performed or observed by the Company on or prior to the Purchase Closing Date). (ii) Legal Investment. On the Purchase Closing Date, there shall not ---------------- be in effect any Law or Order directing that the purchase and sale of the Shares and the other transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement not be consummated or which has the effect of rendering it unlawful to consummate such transactions. (iii) Proceedings and Litigation. No Action shall have been -------------------------- commenced by any governmental authority against any party hereto seeking to restrain or delay (x) the purchase and sale of the Shares, the Warrants, the PBV Units or the LDIG Shares or (y) 34 the other transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement. (iv) Approvals. All approvals, consents, permits and waivers of --------- governmental authorities necessary or appropriate for consummation of the transactions contemplated by this Agreement shall have been obtained. (v) Compliance Certificate; Secretary's Certificate. The Company ----------------------------------------------- shall have delivered to Purchaser a compliance certificate, executed by the Chief Executive Officer or the President of the Company, dated as of the Purchase Closing Date, to the effect that the conditions specified in Section 7.1(a)(i) have been satisfied. The Company shall have delivered to Purchaser a certificate executed by the Secretary of the Company, dated as of the Purchase Closing Date, certifying as to (x) the resolutions of the Board evidencing approval of the transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement and the authorization of the named officer or officers to execute and deliver this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement and (y) certain of the officers of the Company, their titles and examples of their signatures. (vi) HSR Compliance. All waiting periods applicable to the purchase -------------- of the Shares and the Warrants under the HSR Act shall have been terminated or expired. (vii) Registration Rights Agreement. The applicable Registration ----------------------------- Rights Agreement shall have been executed by the Company and delivered to Purchaser. (viii) Listing of Shares. The Shares shall have been approved for ----------------- listing on the NYSE, subject to official notice of issuance. (ix) Satisfaction of Other Conditions. All of the conditions set -------------------------------- forth in Sections 7.1(c) (other than clause (viii)) and 7.1(d) (other than clause (ix)) hereof shall have been satisfied (or waived by the appropriate party). (b) Conditions to Obligations of the Company. The Company's obligation to ---------------------------------------- issue and sell the Shares at the Purchase Closing is subject to the satisfaction (or waiver by the Company), on or prior to such Closing, of the following conditions: (i) Representations and Warranties of Purchaser True; ------------------------------------------------- Performance of Obligations. Each of the representations and warranties of -------------------------- Purchaser contained in this Agreement shall be true and correct in all material respects as of the Purchase Closing Date. Purchaser shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Purchase Closing Date. (ii) Legal Investment. On the Purchase Closing Date, there shall ---------------- not be in effect any Law or Order directing that the purchase and sale of the Shares and the other 35 transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement not be consummated or which has the effect of rendering it unlawful to consummate such transactions. (iii) Proceedings and Litigation. No Action shall have -------------------------- been commenced by any governmental authority against any party hereto seeking to restrain or delay (x) the purchase and sale of the Shares, the Warrants, the PBV Units or the LDIG Shares or (y) the other transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement. (iv) Approvals. All approvals, consents, permits and --------- waivers of governmental authorities necessary or appropriate for consummation of the transactions contemplated by this Agreement shall have been obtained. (v) Purchaser's Compliance Certificate; Secretary's Certificate. ----------------------------------------------------------- Purchaser shall have delivered to the Company a compliance certificate, executed by the Chief Executive Officer or the President of Purchaser, dated as of the Purchase Closing Date, to the effect that the conditions specified in Section 7.1(b)(i) have been satisfied. Purchaser shall have delivered to the Company a certificate executed by the Secretary of Purchaser, dated as of the Purchase Closing Date, certifying as to (x) the resolutions of the Board evidencing approval of the transactions contemplated by this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement and the authorization of the named officer or officers to execute and deliver this Agreement and the applicable Registration Rights Agreement and (y) certain of the officers of Purchaser, their titles and examples of their signatures. (vi) HSR Compliance. All waiting periods applicable to the purchase -------------- of the Shares and the Warrants under the HSR Act shall have been terminated or expired. (vii) Registration Rights Agreement. The applicable Registration ----------------------------- Rights Agreement shall have been executed by Purchaser and delivered to the Company. (viii) Satisfaction of Other Conditions. All of the conditions set -------------------------------- forth in Sections 7.1(c) (other than clause viii)) and 7.1(d) (other than clause (ix)) hereof shall have been satisfied (or waived by the appropriate party). (c) Obligations of Liberty Digital. Liberty Digital's obligation to ------------------------------ issue and sell the LDIG Purchase Shares at the Purchase Closing is subject to the satisfaction (or waiver by Liberty Digital), on or prior to such Closing, of the following conditions: (i) Representations and Warranties of the Company True; Performance --------------------------------------------------------------- of Obligations. Each of the representations and warranties of the Company -------------- contained in Sections 3.4, 3.11, 3.12., 3.18 and 3.20 of this Agreement that is qualified as to materiality or Material Adverse Effect shall be true and correct, and each of the representations and warranties of the Company contained in such sections that is not so 36 qualified as to materiality or Material Adverse Effect shall be true and correct in all material respects, in each case as of the Purchase Closing Date (except for those representations and warranties which address matters only as of a particular date, which shall be true and correct, or true and correct in all material respects, as the case may be, as of such date). The Company shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Purchase Closing Date. (ii) Legal Investment. On the Purchase Closing Date, there shall ---------------- not be in effect any Law or Order directing that the purchase and sale of the LDIG Purchase Shares and the other transactions contemplated by this Agreement and the applicable Registration Rights Agreement not be consummated or which has the effect of rendering it unlawful to consummate such transactions . (iii) Proceedings and Litigation. No Action shall have been -------------------------- commenced by any governmental authority against any party hereto seeking to restrain or delay (x) the purchase and sale of the LDIG Purchase Shares, (y) the other transactions contemplated by this Agreement and the applicable Registration Rights Agreement. (iv) Approvals. All approvals, consents, permits and waivers of --------- governmental authorities necessary or appropriate for consummation of the transactions contemplated by this Agreement shall have been obtained. (v) Compliance Certificate; Secretary's Certificate. The Company ----------------------------------------------- shall have delivered to Liberty Digital a compliance certificate, executed by the Chief Executive Officer or the President of the Company, dated as of the Purchase Closing Date, to the effect that the conditions specified in Section 7.1(c)(i) have been satisfied. The Company shall have delivered to Liberty Digital a certificate executed by the Secretary of the Company, dated as of the Purchase Closing Date, certifying as to (x) the resolutions of the Board evidencing approval of the transactions contemplated by this Agreement and the applicable Registration Rights Agreement and the authorization of the named officer or officers to execute and deliver this Agreement and the applicable Registration Rights Agreement and (y) certain of the officers of the Company, their titles and examples of their signatures. (vi) HSR Compliance. All waiting periods applicable to the purchase -------------- of the LDIG Purchase Shares under the HSR Act shall have been terminated or expired. (vii) Registration Rights Agreement. The applicable Registration ----------------------------- Rights Agreement shall have been executed by the Company and delivered to Liberty Digital. (viii) Satisfaction of Other Conditions. All of the conditions set -------------------------------- forth in Sections 7.1(a) (other than clause (ix)) and 7.1(b) (other than clause (viii)) hereof shall have been satisfied (or waived by the appropriate party). 37 (d) Conditions to Obligations of the Company. The Company's obligation to ---------------------------------------- purchase the LDIG Purchase Shares at the Purchase Closing is subject to the satisfaction (or waiver by the Company), on or prior to such Closing, of the following conditions: (i) Representations and Warranties True; Performance of Obligations. -------------------------------------------------------------- Each of the representations and warranties of Liberty Digital contained in this Agreement that is qualified as to materiality or Material Adverse Effect shall be true and correct, and each of the representations and warranties of Liberty Digital contained in this Agreement that is not so qualified as to materiality or Material Adverse Effect shall be true and correct in all material respects, in each case as of the Purchase Closing Date (except for those representations and warranties which address matters only as of a particular date, which shall be true and correct, or true and correct in all material respects, as the case may be, as of such date). Liberty Digital shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Purchase Closing Date. (ii) Legal Investment. On the Purchase Closing Date, there shall not ---------------- be in effect any Law or Order directing that the purchase and sale of the LDIG Purchase Shares and the other transactions contemplated by this Agreement and the applicable Registration Rights Agreement not be consummated or which has the effect of rendering it unlawful to consummate such transactions. (iii) Proceedings and Litigation. No Action shall have been -------------------------- commenced by any governmental authority against any party hereto seeking to restrain or delay (x) the purchase and sale of the LDIG Purchase Shares, or (y) the other transactions contemplated by this Agreement and the applicable Registration Rights Agreement. (iv) Approvals. All approvals, consents, permits and waivers of --------- governmental authorities necessary or appropriate for consummation of the transactions contemplated by this Agreement shall have been obtained. (v) Purchaser's Compliance Certificate; Secretary's Certificate. ----------------------------------------------------------- Liberty Digital shall have delivered to the Company a compliance certificate, executed by the Chief Executive Officer or the President of Liberty Digital, dated as of the Purchase Closing Date, to the effect that the conditions specified in Section 7.1(d)(i) have been satisfied. Liberty Digital shall have delivered to the Company a certificate executed by the Secretary of Liberty Digital, dated as of the Purchase Closing Date, certifying as to (x) the resolutions of the Board evidencing approval of the transactions contemplated by this Agreement and the applicable Registration Rights Agreement and the authorization of the named officer or officers to execute and deliver this Agreement and the applicable Registration Rights Agreement and (y) certain of the officers of Liberty Digital, their titles and examples of their signatures. (vi) HSR Compliance. All waiting periods applicable to the purchase of -------------- the LDIG Purchase Shares under the HSR Act shall have been terminated or expired. 38 (vii) Registration Rights Agreement. The applicable Registration ----------------------------- Rights Agreement shall have been executed by Liberty Digital and delivered to the Company. (viii) Listing of Shares. All of the LDIG Purchase Shares shall have ----------------- been approved for quotation on Nasdaq, subject to official notice of issuance. (ix) Satisfaction of Other Conditions. The conditions set forth in -------------------------------- Sections 7.1(a)(other than clause (ix)) and 7.1(b) (other than clause (viii)) hereof shall have been satisfied (or waived by the appropriate party). SECTION 7.2 Option Closing Conditions. ------------------------- (a) Obligations of Purchaser. Purchaser's obligation to purchase the PBV ------------------------ Units at the Option Closing is subject to the satisfaction (or waiver by Purchaser), on or prior to such Closing, of the following conditions: (i) Representations and Warranties True; Performance of Obligations. --------------------------------------------------------------- Each of the representations and warranties of the Company contained in the Company Certificate that is qualified as to materiality or Material Adverse Effect shall be true and correct, and each of the representations and warranties of the Company contained in the Company Certificate that is not so qualified as to materiality or Material Adverse Effect shall be true and correct in all material respects, in each case as of the Option Closing Date (except for those representations and warranties which address matters only as of a particular date, which shall be true and correct, or true and correct in all material respects, as the case may be, as of such date). The Company shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Option Closing Date. (ii) Legal Investment. On the Option Closing Date, there shall not ---------------- be in effect any Law or Order directing that the purchase and sale of the PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty Media Shares, not be consummated or which has the effect of rendering it unlawful to consummate such transaction. (iii) Proceedings and Litigation. No Action shall have been -------------------------- commenced by any governmental authority against any party hereto seeking to restrain or delay the purchase and sale of the PBV Units in exchange for, if applicable, the LDIG Shares or the Liberty Media Shares. (iv) Approvals. All approvals, consents, permits and waivers of --------- governmental authorities necessary or appropriate for consummation of the sale of the PBV Units in exchange for, if applicable, the LDIG Shares or the Liberty Media Shares shall have been obtained. (v) Compliance Certificate. The Company shall have delivered to ---------------------- Purchaser a compliance certificate, executed by the Chief Executive Officer or the President of the 39 Company, dated as of the Option Closing Date, to the effect that the conditions specified in Section 7.2(a)(i) have been satisfied. (vi) HSR Compliance. All waiting periods applicable to the purchase -------------- of the PBV Units and, if applicable, the acquisition in exchange therefor of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have been terminated or expired. (vii) Registration Rights Agreement. The applicable Registration ----------------------------- Rights Agreement shall have been executed by PBV and delivered to Purchaser or Liberty Digital. (b) Conditions to Obligations of the Company. The Company's obligation to issue and sell the PBV Units and to purchase the LDIG Shares at the Option Closing is subject to the satisfaction (or waiver by the Company), on or prior to such Closing, of the following conditions: (i) Representations and Warranties True; Performance of Obligations. --------------------------------------------------------------- Each of the representations and warranties of Purchaser or Liberty Digital contained in the Liberty Certificate or AT&T contained in the AT&T Certificate, as the case may be, that is qualified as to materiality or Material Adverse Effect shall be true and correct, and each of the representations and warranties of Purchaser, Liberty Digital or AT&T contained in the Liberty Certificate or the AT&T Certificate, as applicable, that is not so qualified as to materiality or Material Adverse Effect shall be true and correct in all material respects, in each case as of the Option Closing Date (except for those representations and warranties which address matters only as of a particular date, which shall be true and correct, or true and correct in all material respects, as the case may be, as of such date). Purchaser and Liberty Digital shall have performed in all material respects all agreements, obligations, covenants and conditions herein required to be performed or observed by it on or prior to the Option Closing Date. (ii) Legal Investment. On the Option Closing Date, there shall not ---------------- be in effect any Law or Order directing that the purchase and sale of the PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty Media Shares, not be consummated or which has the effect of rendering it unlawful to consummate such transaction. (iii) Proceedings and Litigation. No Action shall have been -------------------------- commenced by any governmental authority against any party hereto seeking to restrain or delay the purchase and sale of the PBV Units in exchange for, if applicable, the LDIG Shares or the Liberty Media Shares. (iv) Approvals. All approvals, consents, permits and waivers of --------- governmental authorities necessary or appropriate for consummation of the sale of the PBV Units in exchange for, if applicable, the LDIG Shares or the Liberty Media Shares shall have been obtained. 40 (v) Compliance Certificate. Purchaser, Liberty Digital or AT&T, as ---------------------- applicable, shall have delivered to the Company a compliance certificate, executed by the Chief Executive Officer or the President of such company, dated as of the Option Closing Date, to the effect that the conditions specified in Section 7.2(b)(i) have been satisfied. (vi) HSR Compliance. All waiting periods applicable to the purchase -------------- of the PBV Units and, if applicable, the acquisition in exchange therefor of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have been terminated or expired. (vii) Registration Rights Agreement. If the Option Purchaser Price ----------------------------- is not paid in cash, the applicable Registration Rights Agreement shall have been executed by Liberty Digital or AT&T and delivered to the Company. (viii) Listing of LDIG Shares. The LDIG Shares or the Liberty Media ---------------------- Shares, as the case may be, shall have been approved for quotation on Nasdaq, subject to official notice of issuance. ARTICLE VIII MISCELLANEOUS ------------- SECTION 8.1 Other Definitions. The following terms as used in this ----------------- Agreement shall have the following meanings: (a) "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person, for so long as such Person remains so associated to the specified Person. (b) "Control" (including the terms "controlled by" and "under common ------- ------------- ------------ control with"), with respect to the relationship between or among two or more - ------------ Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise. (c) "Group" shall have the meaning assigned to it in Section 13(d)(3) of ----- the Exchange Act. (d) "Person" means any individual, corporation, limited liability company, ------ limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any Group comprised of two or more of the foregoing. 41 SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial. This ------------------------------------------------- Agreement shall be governed in all respects by the laws of the State of New York. No suit, action or proceeding with respect to this Agreement may be brought in any court or before any similar authority other than in a court of competent jurisdiction in the State of New York. Each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of such suit, proceeding or judgment. Each of the parties hereto hereby irrevocably waives any right which it may have had to bring such an action in any other court, domestic or foreign, or before any similar domestic or foreign authority. Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury in any legal action or proceeding in relation to this Agreement and for any counterclaim therein. SECTION 8.3 Successors and Assigns; Assignment. Except as otherwise ---------------------------------- expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties hereto. This Agreement may not be assigned without the prior written consent of each other party. SECTION 8.4 Entire Agreement; Supersedes Prior Agreement. This Agreement -------------------------------------------- and the Exhibits hereto, the applicable Registration Rights Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. SECTION 8.5 Severability. In case any provision of this Agreement shall be ------------ invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 8.6 Amendment and Waiver. This Agreement may be amended or -------------------- modified, and the rights of the parties hereunder may only be waived, upon the written consent of each party sought to be bound. SECTION 8.7 Delays or Omissions. It is agreed that no delay or omission to ------------------- exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement or the applicable Registration Rights Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any party's part of any breach, default or noncompliance under this Agreement or the applicable Registration Rights Agreement or any waiver on such party's part of any provisions or conditions of this Agreement or the applicable Registration Rights Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or the applicable Registration Rights Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative. 42 SECTION 8.8 Notices. All notices required or permitted hereunder shall be ------- in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the addresses set forth below: If to the Company: PRIMEDIA, Inc. 745 Fifth Avenue 23rd Floor New York, NY 10151 Telephone: (212) 745-0100 Fax: (212) 745-0199 Attn: Beverly C. Chell, Esq. with copies to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telephone: (212) 455-2000 Fax: (212) 455-2502 Attn: Marni J. Lerner, Esq. If to Purchaser or Liberty Digital: Liberty Media Group 9197 South Peoria Street Engelwood, Colorado 80112 Telephone: (720) 875-5400 Fax: (720) 875-5382 Attn: Charles Tanabe, Esq. Liberty Digital, Inc. 12312 West Olympic Boulevard Los Angeles, CA 90064 Telephone: (310) 979-5006 Fax: (310) 979-5003 Attn: Craig Enenstein 43 with copies to: Baker Botts LLP 599 Lexington Avenue New York, NY 10012 Telephone: (212) 705-5000 Fax: (212) 705-5125 Attn: Robert W. Murray Jr., Esq. SECTION 8.9 Expenses. Each party hereto shall pay all costs and expenses -------- that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement, the Warrant Agreement and the applicable Registration Rights Agreement. SECTION 8.10 Titles and Subtitles. The titles of the sections and -------------------- subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. SECTION 8.11 Termination. This Agreement may be terminated by (i) mutual ----------- agreement of the parties hereto or (ii) by Purchaser or the Company in the event the Purchase Closing has not occurred by August 1, 2000; provided, that this -------- termination right may not be exercised by a party whose nonperformance has delayed the Purchase Closing. Upon termination of this Agreement pursuant to this Section 8.11, this Agreement shall be void and of no further force and effect and no party shall have any liability to any other party under this Agreement, except that nothing herein shall relieve any party from any liability for the breach of any of the representations, warranties, covenants and agreements set forth in this Agreement and except as contemplated by Section 8.9. SECTION 8.12 Counterparts; Execution by Facsimile Signature. This ---------------------------------------------- Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature(s). [Remainder of page intentionally left blank.] IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof. PRIMEDIA INC. By: ________________________________ Name: Title: LIBERTY MEDIA CORPORATION By: ________________________________ Name: Title: LIBERTY DIGITAL, INC. By: ____________________________ Name: Title: EX-7.(D) 3 WARRANT AGREEMENT EXHIBIT 7(d) ================================================================================ WARRANT AGREEMENT between PRIMEDIA INC. and LIBERTY PRIME, INC. Dated as of April 19, 2000 ================================================================================ This WARRANT AGREEMENT (the "Agreement") is entered into as of April 19, --------- 2000, between PRIMEDIA INC., a Delaware corporation (the "Company"), and LIBERTY ------- PRIME, INC., a Delaware corporation ("Purchaser"). --------- WHEREAS, pursuant to the Stock Purchase Agreement, dated as of March 29, 2000, among the Company, Liberty Media Corporation, a Delaware corporation ("Liberty Media"), and Liberty Digital, Inc., a Delaware corporation and a ------------- majority owned subsidiary of Liberty Media (the "Stock Purchase Agreement"), the ------------------------ Company has authorized the sale and issuance to Liberty Media or its designee of warrants to purchase initially up to 1,500,000 shares of common stock, par value $0.01 per share (the "Common Stock"), of the Company on the terms and subject to ------------ the conditions set forth herein. WHEREAS, in accordance with the terms and conditions of the Stock Purchase Agreement, Liberty Media has designated Purchaser as its designee to acquire the Warrants. WHEREAS, Purchaser desires to acquire the Warrants on the terms and conditions set forth in the Stock Purchase Agreement and herein. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1. Defined Terms SECTION 1.1 Definitions. Capitalized terms used and not defined herein ----------- shall have the meanings assigned to them in the Stock Purchase Agreement. As used herein, the following terms shall have the following meanings: "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person, for so long as such Person remains so associated to the specified Person. "Board" means the Board of Directors of the Company. ----- "Business Day" means any day that is not a Saturday, a Sunday or other day ------------ on which banks are required or authorized by law to be closed in The City of New York. "control" (including the terms "controlled by" and "under common control ------- ------------- -------------------- with"), with respect to the relationship between or among two or more Persons, - ---- means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise. "Exchange Act" means the Securities Exchange Act of 1934, as amended. ------------ 2 "Exercise Price" means, at any date herein, the price at which a share of -------------- Common Stock may be purchased pursuant to this Warrant on such date. On the date of original issuance of this Warrant, the Exercise Price is $25.00 per share of Common Stock. "Expiration Date" means the third anniversary of the Purchase Closing --------------- Date. "Group" shall have the meaning assigned to it in Section 13(d)(3) of the ----- Exchange Act. "Holder" means the duly registered holder of this Warrant under the terms ------ hereof. "Independent Investment Banking Firm" means an investment banking firm of ----------------------------------- nationally recognized standing that is, in the reasonable judgment of the Person engaging such firm, qualified to perform the task for which it has been engaged. "Majority Holders" shall mean the Holders of Warrants exercisable for in ---------------- excess of 50% of the aggregate number of shares of Common Stock then purchasable upon exercise of all of the Warrants then outstanding. "Market Value" means, (a) with respect to capital stock or other equity ------------ securities, the last reported sales price on the date of determination or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case (i) on the principal national securities exchange on which the shares of such capital stock or other equity interest are listed or to which such shares are admitted for trading or (ii) if such capital stock or other equity interest is not listed or admitted for trading on a national securities exchange, in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. National Market System ("Nasdaq") or any comparable system, or (iii) if such capital stock or ------ other equity interest is not listed on Nasdaq or a comparable system, as furnished by two members of the National Association of Securities Dealers, Inc. ("NASD") selected from time to time in good faith by the Board for that purpose. ---- In the absence of all of the foregoing, or if for any other reason the Market Value per share cannot be determined pursuant to the foregoing provisions or if the consideration to be received by the holders of Common Stock consists of evidences of indebtedness, other property, warrants, options or subscription of purchase rights, the Market Value shall be the fair market value thereof as determined by an Independent Investment Banking Firm selected by the Company and reasonably acceptable to the Majority Holders. Subject to Section 4.10, the Company shall bear the fees and expenses of any Independent Investment Banking Firm involved in the determination of Market Value. "Person" means any individual, corporation, limited liability company, ------ limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any Group comprised of two or more of the foregoing. "SEC" means the U.S. Securities and Exchange Commission. --- 3 "Securities Act" means the Securities Act of 1933, as amended. -------------- ARTICLE 2. Grant ----- SECTION 2.1 The Company hereby grants to Purchaser warrants (the "Warrants") which shall entitle the registered holder thereof to purchase from -------- the Company, in accordance with the terms hereof, initially up to 1,500,000 shares (the "Warrant Shares") of Common Stock, subject to adjustment as provided -------------- in Article 7, at the Exercise Price, subject to adjustment as provided in Article 7, all subject to the terms and conditions set forth herein. SECTION 2.2 Warrant Certificates. The Warrants shall be evidenced by -------------------- certificates issued pursuant to this Agreement (the "Warrant Certificates") in -------------------- the form set forth in Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement. ARTICLE 3. Exercise Terms -------------- SECTION 3.1 Exercise Periods. At any time from and after the date of this ---------------- Agreement and until 12:00 a.m., New York City time, on the Expiration Date, the Holder may exercise the Warrants, on any Business Day, for all or any part of the Warrant Shares. SECTION 3.2 Expiration. Each Warrant shall terminate and become void, and ---------- all rights thereunder and all rights in respect thereof under this Agreement shall cease, as of the earlier of (i) 12:00 a.m., New York City time, on the Expiration Date and (ii) the time and date such Warrant is exercised. SECTION 3.3 Manner of Exercise. In order to exercise the Warrants, in ------------------ whole or in part, the Holder shall deliver to the Company at its principal office at 745 Fifth Avenue, 23rd Floor, New York, NY 10151, or at the office or agency designated by the Company pursuant to Article 7, (i) a Warrant Certificate with the annexed Subscription Form duly executed and (ii) payment of the Exercise Price for the number of Warrant Shares in respect of which such Warrant(s) is then exercised. Payment of the Exercise Price shall be made in cash, by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose. In the event that such a Warrant Certificate is surrendered for exercise in respect of less than all the Warrant Shares purchasable on such exercise at any time prior to the Expiration Date, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares, deliver to such Holder a new Warrant Certificate evidencing the rights of such Holder to purchase the remaining number 4 of Warrant Shares, which new Warrant Certificate shall in all other respects be identical with the surrendered Warrant Certificate. SECTION 3.4 Issuance of Warrant Shares. Subject to Section 3.5, upon the -------------------------- surrender of a Warrant Certificate and payment of the per share Exercise Price as set forth in Section 3.3, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, issue or cause there to be issued and deliver or cause to be delivered to the Holder (i) a certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of such Warrant Certificate or (ii) such other securities or property to which the Holder is entitled, registered or otherwise to the Person or Persons entitled to receive the same, together with cash as provided in Section 3.5 in respect of any fractional Warrant Shares otherwise issuable upon such exercise. Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the delivery of the Warrant Certificate (together with a duly executed Subscription Form) and payment of the Exercise Price. SECTION 3.5 Fractional Warrant Shares. The Company shall not be required ------------------------- to issue fractional Warrant Shares on the exercise of the Warrants. If any fraction of a Warrant Share would, except for the provisions of this Section 3.5, be issuable on the exercise of a Warrant (or specified portion thereof), the Company shall pay an amount in cash equal to the Market Value for one Warrant Share on the Business Day immediately preceding the date such Warrant is exercised, multiplied by such fraction, computed to the nearest whole cent. For purposes of determining the Market Value, if in accordance with such term, an Independent Investment Banking Firm would be required to be hired to determine the Market Value and but for this Section 3.5, an Independent Investment Banking Firm is not otherwise required to be retained to determine Market Value at such time, then Market Value shall be determined in good faith by the Board. SECTION 3.6 Reservation of Warrant Shares. (a) The Company shall at all ----------------------------- times on and following the Purchase Closing Date keep reserved out of its authorized shares of Common Stock a number of shares of Common Stock sufficient to provide for the exercise in full of all outstanding Warrants. The registrar for the Common Stock shall at all times on and following the Purchase Closing Date and until the Expiration Date, or the time at which all Warrants have been exercised or canceled, reserve such number of authorized shares as shall be required for such purpose. All Warrant Shares which may be issued upon exercise of the Warrants shall be duly and validly authorized, validly issued, fully paid, nonassessable, free of preemptive rights and free from all Encumbrances. (b) Before taking any action which would cause an adjustment pursuant to Article 4 to reduce the Exercise Price below the then par value (if any) of the Common Stock, the Company shall take any and all 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 shares of Common Stock at the Exercise Price as so adjusted. 5 SECTION 3.7 Compliance with Law. If any shares of Common Stock required to ------------------- be reserved for purposes of exercise of the Warrants would require, under any federal or state law or applicable governing rule or regulation of any national securities exchange, Nasdaq or any comparable system, registration with or approval of any governmental authority, or listing on any such national securities exchange, Nasdaq or any comparable system before such shares may be issued upon exercise, the Company will use its reasonable best efforts to cause such shares to be duly registered or approved by such governmental authority or listed on the relevant national securities exchange, Nasdaq or any comparable system, at its expense. ARTICLE 4. Adjustment Provisions --------------------- SECTION 4.1 Changes in Common Stock. In the event that at any time or from ----------------------- time to time after the date hereof, the Company shall (i) pay a dividend or make a distribution on its Common Stock in shares of its Common Stock or other shares of its capital stock to all holders of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) increase or decrease the number of shares of Common Stock outstanding by reclassification of its Common Stock (in each case, other than a transaction to which Section 4.4 is applicable), then the number of shares of Common Stock purchasable upon exercise of the Warrants immediately after the happening of such event shall be adjusted so that, after giving effect to such adjustment, each Holder of the Warrants shall be entitled to receive the number of shares of Common Stock (and other shares of capital stock, if applicable) upon exercise that such Holder would have owned or have been entitled to receive had the Warrants been exercised immediately prior to the happening of the events described above (or, in the case of a dividend or distribution of Common Stock or other shares of capital stock, immediately prior to the record date therefor), and the Exercise Price shall be adjusted in inverse proportion. An adjustment made pursuant to this Section 4.1 shall become effective immediately after the effective date, retroactive to the record date therefor in the case of a dividend or distribution in shares of Common Stock or other shares of capital stock, and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. The adjustment contemplated by this Section 4.1 shall be made successively whenever any event listed above shall occur. SECTION 4.2 Cash Dividends and Certain Other Distributions. In case at any ---------------------------------------------- time or from time to time after the date hereof, the Company shall distribute to all holders of Common Stock any dividend or other distribution of cash (other than ordinary cash dividends, but including extraordinary cash dividends), evidences of its indebtedness, shares of its capital stock or any other properties or securities or (ii) any options, warrants or other rights to subscribe for or purchase any of the foregoing (other than, in each case set forth in (i) and (ii), (x) any dividend or distribution described in Section 4.1 or, (y) any rights, options, warrants or securities described in Section 4.3), then (i) the number of shares of Common Stock purchasable upon the exercise of the Warrants shall be increased to a number determined by multiplying the number of 6 shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to the record date for any such dividend or distribution by a fraction, (A) the numerator of which shall be the Market Value per share of Common Stock on the record date for such distribution, and (B) the denominator of which shall be such Market Value per share of Common Stock less the sum of (x) any cash distributed per share of Common Stock and (y) the fair value (the "Fair Value") ---------- (as determined in good faith by the Board, whose determination shall be evidenced by a board resolution) of the portion, if any, of the distribution applicable to one share of Common Stock consisting of evidences of indebtedness, shares of stock, securities or other property and (ii) the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such record date by the above fraction. Such adjustments shall be made successively whenever any distribution is made and shall become effective as of the date of distribution, retroactive to the record date for any such distribution; provided, however, that the Company is not required to make an -------- ------- adjustment pursuant to this Section 4.2 (other than with respect to rights, warrants or other subscription rights that expire by their terms prior to the Expiration Date) if at the time of such distribution the Company sets aside for the benefit of the Holders of Warrants the same distribution as it makes to holders of Common Stock pro rata based on the number of shares of Common Stock for which such Warrants are then exercisable. SECTION 4.3 Rights Issue. In the event that at any time or from time to ------------ time after the date hereof, the Company shall issue, sell, distribute or otherwise grant any rights to subscribe for or to purchase, or any options or warrants for the purchase of, or any securities convertible or exchangeable into, Common Stock to all holders of Common Stock, entitling such holders to subscribe for or purchase shares of Common Stock or stock or securities convertible into Common Stock, whether or not immediately exercisable, convertible or exchangeable, as the case may be, and the subscription or purchase price per share of Common Stock or the price per share of Common Stock issuable upon exercise, conversion or exchange thereof is lower at the record date for such issuance than the then Market Value per share of Common Stock, the number of shares of Common Stock thereafter purchasable upon the exercise of the Warrants shall be determined by multiplying the number of shares of Common Stock purchasable upon the exercise of the Warrants prior to the record date by a fraction, (A) the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options, warrants or securities plus the maximum number of additional shares of Common Stock offered for subscription or purchase or into or for which such securities are convertible or exchangeable, and (B) the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options, warrants or securities plus the total number of shares of Common Stock which could be purchased at the Market Value with the aggregate consideration received through the issuance of such rights, warrants, options, or convertible securities. In the event of any such adjustment, the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such date of issuance by the above fraction. Such adjustment shall be made successively whenever such rights, options or warrants are issued and shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such rights, options, warrants or securities. 7 If the Company at any time shall issue two or more securities as a unit and one or more of such securities shall be rights, options or warrants for or securities convertible or exchangeable into, Common Stock subject to this Section 4.3, the consideration allocated to each such security shall be determined in good faith by a Board resolution. SECTION 4.4 Reorganization, Reclassification, Merger, Consolidation or ---------------------------------------------------------- Disposition of Assets. In case the Company shall reorganize its capital, - --------------------- reclassify its capital stock, consolidate or merge with or into another Person (where the Company is not the surviving entity or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another Person and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring Person, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring Person ("Other Property"), are to be received by -------------- or distributed to the holders of Common Stock of the Company, then each Holder shall have the right thereafter to receive, upon exercise of such Warrant, the number of shares of common stock of the successor or acquiring Person or of the Company, if it is the surviving entity, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which such Warrant is exercisable immediately prior to such event (assuming, to the extent applicable, that such holder failed to exercise any rights of election with respect thereto and, in the case of a transaction in which non-electing holders receive more than two types of consideration, assuming that such holder received per share of Common Stock the kind and amount of shares of common stock of the successor or acquiring person and/or Other Property received by a plurality of the non-electing shares of Common Stock). In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring Person (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of the Warrants to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the Board) in order to provide for adjustments of shares of the common stock of the successor or acquiring person for which this Warrant is exercisable (in addition to any Other Property) which shall be as nearly equivalent as practicable to the adjustments provided for in this Article 4 with respect to the Common Stock. For purposes of this Section 4.4 "common stock of the successor or acquiring Person" shall include stock of such Person of any class which is not preferred as to dividends or assets over any other class of stock of such Person and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 4.4 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or dispositions of assets. 8 SECTION 4.5 Superseding Adjustment. Upon the expiration of any rights, ---------------------- options, warrants or conversion or exchange privileges which resulted in any adjustments pursuant to this Article 4, if any thereof shall not have been exercised, the number of Warrant Shares purchasable upon the exercise of each Warrant shall be readjusted as if (A) the only shares of Common Stock issuable upon exercise of such rights, options, warrants, conversion or exchange privileges were the shares of Common Stock, if any, actually issued upon the exercise of such rights, options, warrants or conversion or exchange privileges and (B) shares of Common Stock actually issued, if any, were issuable for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange privileges whether or not exercised and the Exercise Price shall be readjusted inversely; provided, however, that no such readjustment shall (except -------- ------- by reason of an intervening adjustment under Section 4.1) have the effect of decreasing the number of Warrant Shares purchasable upon the exercise of each Warrant or increasing the Exercise Price by an amount in excess of the amount of the adjustments to the number of Warrant Shares purchasable and the Exercise Price initially made in respect of the issuance, sale or grant of such rights, options, warrants or conversion or exchange privileges. SECTION 4.6 Minimum Adjustment. The adjustments required by the preceding ------------------ Sections of this Article 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price or the number of shares of Common Stock purchasable upon exercise of the Warrants that would otherwise be required shall be made (except in the case of a subdivision or combination of shares of Common Stock, as provided for in Section 4.1) unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases by at least 1% the Exercise Price or the number of shares of Common Stock purchasable upon exercise of the Warrants immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Article 4 and not previously made, would result in a minimum adjustment. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. In computing adjustments under this Article 4, fractional interests in Common Stock shall be taken into account to the nearest one-hundredth of a share. SECTION 4.7 Other Provisions Regarding Adjustments. In the event that at -------------------------------------- any time, as a result of an adjustment made pursuant to Section 4.1 hereof, the Holder of a Warrant shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares of capital stock so receivable upon exercise of such Warrant 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 Common Stock contained in Article 4 and the provisions contained elsewhere herein with respect to Common Stock shall apply on like terms to any such other shares. 9 SECTION 4.8 Notice of Adjustment. Whenever the Exercise Price or the -------------------- number of shares of Common Stock and other property, if any, purchasable upon exercise of Warrants is adjusted, as herein provided, the Company shall deliver to the Holders a certificate of a firm of independent accountants (who may be the regular accountants employed by the Company) or the Chief Financial Officer of the Company setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board determined the Market Value of any evidences of indebtedness, other securities or property or warrants or other subscription or purchase rights), and specifying the Exercise Price and the number of shares of Common Stock purchasable upon exercise of the Warrants after giving effect to such adjustment. SECTION 4.9 Notice of Certain Transactions. In the event that the Company ------------------------------ shall resolve or agree (a) to pay any dividend payable in securities of any class to the holders of its Common Stock or to make any other distribution to the holders of its Common Stock, (b) to offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of Common Stock or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification of its Common Stock, capital reorganization, merger, consolidation or disposition of all or substantially all of its assets, the Company shall within 5 days send to the Holders, a notice of such proposed action or offer, such notice to be mailed to the Holders, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, purchasable upon exercise of each Warrant and the Exercise Price after giving effect to any adjustment which will be required as a result of such action. Such notice shall be given by the Company as promptly as possible. ARTICLE 5. Transfer, Division and Combination ---------------------------------- SECTION 5.1 Transfer. Subject to compliance with Section 5.5, transfer of the Warrants and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of the Warrants at the principal office of the Company referred to in Section 3.3 or the office or agency designated by the Company pursuant to Article 7, together with a written assignment of such Warrants substantially in the form of Exhibit B hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall, subject to Section 5.5, execute and deliver a new Warrant Certificate or Warrant Certificates in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant Certificate evidencing the portion of the Warrants not so assigned, and the Warrant Certificate shall promptly be cancelled. A Warrant, if properly assigned in 10 compliance with Section 5.5, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant Certificate issued. If requested by the Company, a new Holder shall acknowledge in writing, in form reasonably satisfactory to the Company, such Holder's continuing obligations under Section 5.5 and Article 9. SECTION 5.2 Division and Combination. Subject to Section 5.5, a Warrant ------------------------ Certificate may be divided or combined with other Warrant Certificates upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrant Certificates are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 5.1 and with Section 5.5, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant Certificate or Warrants Certificates in exchange for the Warrant Certificate or Warrants Certificates to be divided or combined in accordance with such notice. SECTION 5.3 Expenses. The Company shall prepare, issue and deliver at its -------- own expense (other than transfer taxes) the new Warrant Certificate or Warrant Certificates under this Article 5. The Company will pay all documentary stamp taxes attributable to the initial issuance of the Warrants and of the Warrant Shares upon the exercise of the Warrants; provided, however, that the Company -------- ------- shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant Certificates or any certificates for Warrant Shares in a name other than that of the registered Holder of such Warrant Certificate, and the Company shall not be required to issue or deliver such Warrant Certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the reasonable satisfaction of the Company that such tax has been paid. SECTION 5.4 Maintenance of Books. The Company agrees to maintain, at its -------------------- aforesaid office or agency, books for the registration or transfer of the Warrants. SECTION 5.5 Restriction on Transfer. (a) The Warrants and the Warrant ----------------------- Shares issuable upon exercise hereof are subject in all respects to the terms and conditions of the Stock Purchase Agreement. No transfer, sale, assignment, hypothecation or other disposition of the Warrants or the Warrant Shares issuable upon exercise hereof may be made except in accordance with the provisions of the Stock Purchase Agreement (it being understood that any transfer of Common Stock permitted under the provisions of the Stock Purchase Agreement shall be a permitted transfer with respect to the Warrants and the Warrant Shares). The Holder, by acceptance of a Warrant Certificate, agrees to the bound by the applicable provisions of the Stock Purchase Agreement and all applicable benefits of the Stock Purchase Agreement shall inure to such Holder. (b) Each Holder of the Warrants, by acceptance thereof, represents and acknowledges that the Warrants and the Warrant Shares which may be purchased upon exercise of a Warrant have not been registered under the Securities Act or under any state securities laws. Each Holder of the Warrants, by acceptance thereof, represents and acknowledges that such Holder (i) is acquiring the Warrants and the Warrant Shares for investment for its own account, 11 not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, (ii) is an "accredited investor" within the meaning of Regulation D, Rule 501(a), promulgated by the SEC, (iii) acknowledges that the Warrants and the Warrant Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available and (iv) represents that by reason of its business or financial experience, such Holder has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement. Neither the Warrants nor the Warrant Shares may be transferred except (x) pursuant to an effective registration statement under the Securities Act, (y) pursuant to Rule 144 under the Securities Act if the transferor delivers a certificate, in form and substance reasonably satisfactory to the Company, that such transfer complies with the requirements of Rule 144, or (z) pursuant to any other available exemption from registration if such transferee makes the representations set forth in the preceding sentence in writing to the Company and, in the case of clause (z), with the delivery to the Company of an opinion of counsel reasonably satisfactory to the Company by counsel reasonably satisfactory to the Company stating that no registration is required under the Securities Act; provided, however, that such opinion of counsel shall not be required in connection with any transfer to a Subsidiary of Purchaser. (c) (i) Except as otherwise provided in this Section 5.5, each certificate for Warrant Shares initially issued upon the exercise of a Warrant, and each certificate for Warrant Shares issued to any transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSIONER, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR AN APPLICABLE EXEMPTION THEREFROM. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000, AMONG PRIMEDIA INC., LIBERTY MEDIA CORPORATION AND LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH THE COMPANY." (ii) Except as otherwise provided in this Section 5.5, each Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form: NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSIONER, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT. 12 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000, AMONG PRIMEDIA INC, LIBERTY MEDIA CORPORATION AND LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT. THE HOLDER OF THIS WARRANT AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT. (d) Notwithstanding the provisions of Section 5.5(b), (i) the Company shall deliver the Warrants or certificates for Warrant Shares without the first paragraph of the legend set forth in any such clause if the securities referred to in such clause shall have been registered under the Securities Act or if such legend is otherwise not required under the Securities Act, and if such legend has been set forth on any previously delivered certificates, such legend shall be removed from any certificates at the request of the Holder if the securities referred to in such clause have been registered under the Securities Act, or if such legend is not otherwise required under the Securities Act, and (ii) the Company shall deliver the Warrants or certificates for Warrant Shares without the second paragraph of the legend set forth in such clause if such legend is no longer required pursuant to the terms of the Stock Purchase Agreement. ARTICLE 6. Loss or Mutilation ------------------ Upon receipt by the Company from any Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of a Warrant Certificate and indemnity reasonably satisfactory to it (it being understood that the written agreement of the Purchaser shall be sufficient indemnity) and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant Certificate of like tenor to such Holder (without expense to the Holder); provided, in the case of mutilation, no indemnity shall be required if a Warrant Certificate in identifiable form is surrendered to the Company for cancellation. 13 ARTICLE 7. Office of the Company --------------------- As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrant Certificates may be presented for exercise, registration of transfer, division or combination as provided certificates in this Agreement. ARTICLE 8. Limitation of Liability ----------------------- No provision hereof, in the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. ARTICLE 9. Miscellaneous ------------- SECTION 9.1 Nonwaiver. No course of dealing or any delay or failure to --------- exercise any right hereunder on the part of the Holder hereof shall operate as a waiver of such right or otherwise prejudice such Holder's rights, powers or remedies. SECTION 9.2 Unexercised Warrants. Except as otherwise specifically -------------------- required herein, holders of unexercised Warrants are not entitled (i) to receive dividends or other distributions, (ii) to receive notice of or vote at any meeting of the stockholders, (iii) to consent to any action of the stockholders, (iv) to receive notice of any other proceedings of the Company or (v) to exercise any other rights as stockholders of the Company. SECTION 9.3 Amendment. This Agreement, the Warrants and all the Warrant --------- Certificates may be amended with the written consent of the Company and the Majority Holders; provided, however, that no such Warrant may be amended to -------- ------- reduce the number of shares of Common Stock for which such Warrant is exercisable or to increase the Exercise Price (before giving effect to any adjustment as provided therein) without the prior written consent of the Holder thereof. In determining whether the Holders of the required number of Warrants have concurred in any direction, waiver or consent, Warrants owned by the Company or any Subsidiary of the Company shall be disregarded and deemed not to be outstanding. Also, subject to the foregoing, only Warrants outstanding at the time shall be considered in any such determination. 14 SECTION 9.4 Notices. Any notice or communication shall be in writing and ------- delivered in person or mailed by first-class mail to the addresses set forth in the Stock Purchase Agreement with respect to the Company and the Holder on the date hereof and if to any subsequent Holder, at its last known address appearing on the books of the Company maintained for such purposes. The Company and any Holder by notice to the other may designate additional or different addresses for subsequent notices or communications. SECTION 9.5 Remedies. The Company and the Holder hereof each stipulates -------- that the remedies at law of each party hereto in the event of any default or threatened default by the other party in the performance or compliance with any of the terms of this Agreement are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. SECTION 9.6 Governing Law. The laws of the State of New York shall govern ------------- this Agreement. SECTION 9.7 Successors. Subject to Section 5.5 hereof, this Agreement and ---------- the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Company and the Holder hereof, and shall be enforceable by any such successors and assigns. SECTION 9.8 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 9.9 Headings. The headings of the Articles and Sections of this -------- Agreement have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. SECTION 9.10 Severability. The provisions of this Agreement are severable, ------------ and if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction. [Remainder of page intentionally left blank.] IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement as of the date first written above. PRIMEDIA INC. By: -------------------------------- Name: Title: LIBERTY PRIME, INC. By: -------------------------------- Name: Title: EX-7.(E) 4 WARRANT EXHIBIT 7(E) NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSIONER, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000, AMONG PRIMEDIA INC, LIBERTY MEDIA CORPORATION AND LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT. THE HOLDER OF THIS WARRANT AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT. EXERCISABLE UNTIL 12:00 A.M., NEW YORK TIME, on APRIL 19, 2003 No. of Shares of Common Stock: 1,500,000 WARRANT To Purchase Common Stock of PRIMEDIA INC. This is to certify that LIBERTY PRIME, INC., a Delaware corporation, or its registered assigns, is entitled at any time prior to the Expiration Date (as hereinafter defined), to purchase from PRIMEDIA INC., a Delaware corporation (the "Company"), up to ONE MILLION FIVE HUNDRED THOUSAND (1,500,000) shares of common stock, par value $0.01 per share, (the "Common Stock") (subject to adjustment), in whole or in part, at a purchase price of $25.00 per share (subject to adjustment) (the "Exercise Price"), upon surrender of this Warrant Certificate, together with the attached Subscription Form duly executed, and payment of the Exercise Price at the principal office of the Company, but subject to the terms and conditions set forth herein and in the Warrant Agreement dated as of April 19, 2000, between the Company and the holder (the "Warrant Agreement"). Payment of the Exercise Price shall be made, at the option of Holder, in cash, by a certified or official check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose This Warrant may be exercised at such times and in such amounts as are provided for in the Warrant Agreement. Each Warrant not exercised prior to 12:00 a.m. on April 19, 2003, shall become invalid and all rights hereunder, and all rights in respect thereof under the Warrant Agreement, shall cease as of that time. The Warrants evidenced by this Warrant Certificate issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligation, duties and immunities thereunder of the Company and the Holders of the Warrants. A copy of the Warrant Agreement may be obtained by the holder(s) hereof upon written request directed to the Company. The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and the type and/or number of the Company's securities issuable upon exercise of the Warrants may, subject to certain conditions, be adjusted. Upon due presentment for registration of transfer of this Warrant Certificate at the principal office of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax imposed in connection therewith which is not payable by the Company pursuant to Section 5.3 of the Warrant Agreement. Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holder(s) hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are not defined herein and are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. [Remainder of page intentionally left blank.] IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated: April 19, 2000 PRIMEDIA INC. By:_______________________________ Name: Title: SUBSCRIPTION FORM [To be executed only upon exercise of the Warrants.] The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of [up to] ______________ shares of Common Stock of PRIMEDIA INC., and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _________________________ whose address is ___________________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - ------------------------------------- (Name of Registered Owner) - ------------------------------------- (Signature of Registered Owner) - ------------------------------------- (Street Address) - ------------------------------------- (City) (State) (Zip Code) NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within the Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever. EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below: No. of Shares of Name and Address of Assignee of Common Stock - ---------------------------- ----------------- and does hereby irrevocably constitute and appoint ___________________________ attorney-in-fact to register such transfer on the books of PRIMEDIA INC. maintained for the purpose, with full power of substitution in the premises. Dated:_________________________ Name:__________________________ (Print) Signature:_____________________ Witness:_______________________ NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within the Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever. EX-7.(F) 5 REGISTRATION RIGHTS AGREEMENT EXHIBIT 7(f) This REGISTRATION RIGHTS AGREEMENT, dated as of April 19, 2000, is made and entered into by PRIMEDIA INC., a Delaware corporation (the "Company"), and LIBERTY PRIME, INC., a Delaware corporation ("Purchaser"). 1. Background. Pursuant to a Stock Purchase Agreement, dated as of March 29, 2000 (the "Stock Purchase Agreement"), among the Company, Liberty Media Corporation and Liberty Digital, Inc., the Company has sold to Purchaser an aggregate of 8,000,000 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at a purchase price of $25.00 per share, for an aggregate purchase price of $200,000,000.00 and has issued to Purchaser a warrant to purchase 1,500,000 shares of Common Stock, subject to anti-dilution adjustments. 2. Definitions. As used in this Agreement, the following capitalized terms shall have the following respective meanings: "Effective Date" - The first anniversary of the Purchase Closing Date (as such term is defined in the Stock Purchase Agreement). "Exchange Act" - The Securities Exchange Act of 1934, as amended. "Holder" - Purchaser, any affiliate of Purchaser and any other person (a "Third Party Transferee") to whom Purchaser transfers (subject to the terms of the Stock Purchase Agreement) a number of Registrable Securities equal to at least 50% of the number of Registrable Securities initially purchased or received by Purchaser under the Stock Purchase Agreement (as such number may be adjusted for stock splits, combinations and similar events); provided, that any such affiliate of Purchaser or Third Party Transferee agrees in writing to be bound by the provisions of this Agreement; provided, further, that no such Third Party Transferee shall be permitted to further transfer any rights hereunder. "Other Holders"- Persons other than Holders who, by virtue of agreements with the Company, are entitled to include their securities in certain registrations hereunder. "Other Securities"- Securities of the Company, other than Registrable Securities which, by virtue of agreements between Other Holders and the Company, are entitled to be included in certain registrations hereunder. "Person" - Any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or government or any department or agency thereof. "Registrable Securities" - Any Common Stock issued to Purchaser pursuant to the Stock Purchase Agreement (including the Warrant Shares (as defined in the Stock Purchase Agreement)) and any Common Stock which may be issued or distributed in respect of such Common Stock or Warrant Shares by way of stock dividend or stock split or other distribution, recapitalization or reclassification. As to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to 2 the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been distributed to the public pursuant to Rule 144 under the Securities Act, (iii) they shall be freely saleable without restriction under Rule 144(k), (iv) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any state securities or blue sky law then in force, or (v) they shall have ceased to be outstanding. "Registration Expenses" - Any and all expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC and stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or with The Nasdaq Stock Market pursuant to clause (viii) of Section 5, (v) the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, (vi) the reasonable fees and disbursements of one counsel selected by the Holders of a majority of the Registrable Securities being registered to represent all Holders of the Registrable Securities being registered in connection with each such registration, and (vii) any fees and disbursements of underwriters customarily paid by the issuers or sellers of securities, including liability insurance if the Company so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting discounts and commissions and transfer taxes, if any. "Securities Act" - The Securities Act of 1933, as amended. "SEC" - The Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act. 3. Incidental Registrations. (a) Right to Include Registrable Securities. If the Company at any time after the Effective Date proposes to register the offer and sale of Common Stock under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes), whether or not for sale for its own account, pursuant to a registration statement on which it is permissible to register the offer and sale of Registrable Securities to the public under the Securities Act, it will each such time give prompt written notice to all Holders of Registrable Securities of its intention to do so and of such Holders' rights under this Section 3. Upon the written request of any such Holder made within 10 days after the receipt of any such notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder), the Company will use its commercially reasonable efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so 3 requested to register by the Holders thereof; provided, that (i) in the case of a primary offering of its securities, the Company, at any time after giving written notice of its intention to register such securities and prior to the effective date of the registration statement filed in connection with such registration, shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and each Other Holder of Other Securities requested to be included in such registration, and, thereupon, shall be relieved of its obligation to register any Registrable Securities and Other Securities in connection with such registration (but not from its obligation to pay the Registration Expenses to the Holders in connection therewith), and (ii) if such registration involves an underwritten offering, all Holders of Registrable Securities requesting to be included in the Company's registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings. If a registration requested pursuant to this Section 3 involves an underwritten public offering, any Holder of Registrable Securities requesting to be included in such registration may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. The registrations provided for in this Section 3 are in addition to, and not in lieu of, registrations made upon the request of any Holder or Holders in accordance with Section 4. (b) Expenses. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 3. (c) Priority in Incidental Registrations. If a registration pursuant to this Section 3 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the amount of securities requested to be included in such registration exceeds the amount which can be sold in such offering, so as to be likely to have an adverse effect on such offering as contemplated by the Company (including the price and timing at which the Company proposes to sell such securities), then the Company will include in such registration (i) first, 100% of the securities the Company proposes to sell, (ii) second, any Other Securities requested to be registered by Other Holders exercising a demand registration right, and (iii) third, to the extent of the amount of Registrable Securities and Other Securities requested to be included in such registration which, in the opinion of such managing underwriter, can be sold without having the adverse effect referred to above, the amount of Registrable Securities and Other Securities which the Holders and Other Holders have requested to be included in such registration, such amount to be allocated pro rata among all requesting Holders and Other Holders on the basis of the relative number of shares of Registrable Securities and Other Securities then held by each such Holder and Other Holder (provided, that any Registrable Securities and Other Securities thereby allocated to any such Holder or Other Holder that exceed such Holder's or Other Holder's request will be reallocated among the remaining requesting Holders and Other Holders in like manner). 4 4. Registration on Request. (a) Request by Holders. At any time after the Effective Date, upon the written request of any Holder or Holders (the "Demand Party") requesting that the Company effect the registration under the Securities Act of all or part of such Demand Party's Registrable Securities and specifying the intended method of disposition thereof, the Company will promptly give written notice of such requested registration to all other Holders, and thereupon will, as expeditiously as possible, use its best efforts to effect the registration under the Securities Act of: (i) the Registrable Securities which the Company has been so requested to register by the Demand Party; and (ii) all other Registrable Securities which the Company has been requested to register by any other Holder thereof by written request given to the Company within 15 days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Securities), all to the extent necessary to permit the disposition (in accordance with the intended method thereof as aforesaid) of the Registrable Securities so to be registered; provided, that, in no event shall the Company be required to effect more than two registrations pursuant to this Section 4; and provided, further, that, the Company shall not be obligated to file a registration statement relating to any registration request under this Section 4(a) (i) unless the aggregate requests by the Holder or Holders for such registration cover at least 15% of the number of Registrable Securities held by Holder on the date of this Agreement (as such number may be adjusted for stock splits, combinations and similar events), (ii) within a period of nine months after the effective date of any other registration statement relating to any registration request under this Section 4(a), or (iii) if with respect thereto, the managing underwriter, the SEC, the Securities Act or the rules and regulations thereunder, or the form on which the registration statement is to be filed, would require the conduct of an audit other than the regular audit conducted by the Company at the end of its fiscal year, in which case the filing may be delayed until the completion of such regular audit (unless the Holders of the Registrable Securities to be registered agree to pay the expenses of the Company in connection with such an audit other than the regular audit). (b) Registration Statement Form. The Company shall select the registration statement form for any registration pursuant to this Section 4; provided, that if any registration requested pursuant to this Section 4 which is proposed by the Company to be effected by the filing of a registration statement on Form S-3 (or any successor or similar short-form registration statement) shall be in connection with an underwritten public offering, and if the managing underwriter shall advise the Company in writing that, in its opinion, the use of another form of registration statement is of material importance to the success of such proposed offering, then such registration shall be effected on such other form. (c) Expenses. The Company will pay all Registration Expenses in connection with the registrations of Registrable Securities pursuant to this Section 4. 5 (d) Effective Registration Statement. A registration requested pursuant to this Section 4 will not be deemed to have been effected unless it has become effective; provided, that if, within 180 days after it has become effective, the offering of Registrable Securities pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for an aggregate of more than 20 consecutive days following effectiveness, such registration will be deemed not to have been effected. The Holders of Registrable Securities shall be permitted to withdraw all or part of any Registrable Securities from a registration requested pursuant to this Section; provided, that if a sufficient number of Registrable Securities are withdrawn from such registration so that such registration statement does not cover at least 15% of the number of Registrable Securities held by Holder on the date of this Agreement (as such number may be adjusted for stock splits, combinations and similar events), the Company may withdraw such registration statement. Such withdrawn registration statement shall not count as a requested registration under Section 4(a) unless such registration statement shall have been filed with SEC, in which case, such requested registration shall count as a registration requested pursuant to Section 4(a) (and the number of registrations permitted to be requested pursuant to Section 4(a) shall be reduced) unless the Holders agree to pay the Registration Expenses with respect to such registration. (e) Selection of Underwriters. If a requested registration pursuant to this Section 4 involves an underwritten offering, the Holders of a majority of the Registrable Securities included in such registration shall have the right to select the investment banker or bankers and managers to administer the offering, who shall be reasonably acceptable to the Company. (f) Priority in Requested Registrations. If a requested registration pursuant to this Section 4 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Securities) would be likely to have an adverse effect on the offering as contemplated by the Holders (including on the price and timing at which the Demand Party proposes to sell such securities (an "Adverse Effect"), then the Company will include in such registration (i) first, 100% of the Registrable Securities requested to be included in such registration by the Demand Party and all other Holders of Registrable Securities pursuant to this Section 4 (to the extent that the managing underwriter believes that all such Registrable Securities can be sold in such offering without having an Adverse Effect; provided, that if they cannot, such lesser number of Registrable Securities as specified by the Demand Party) and (ii) second, to the extent the managing underwriter believes additional securities can be sold in the offering without having an Adverse Effect, the amount of Other Securities requested to be included by Other Holders in such registration, allocated pro rata among all requesting Other Holders on the basis of the relative amount of all Other Securities then held by each such Other Holder (provided, that any such amount thereby allocated to any such Other Holder that exceeds such Other Holder's request shall be reallocated among the remaining requesting Other Holders in like manner). In the event that the number of Registrable Securities and Other Securities requested to be included in such registration is less than the number which, in the opinion of the managing underwriter, can be sold without having an Adverse Effect, the Company may include in such registration the 6 securities the Company proposes to sell up to the number of securities that, in the opinion of the underwriter, can be sold without having an Adverse Effect. (g) Postponements in Requested Registrations. Notwithstanding Section 4(f), (i) if the Board determines, in its good faith judgment, that the registration and offering otherwise required by this Section 4 would have an adverse effect on a then contemplated public offering of the Company's equity securities, the Company may postpone the filing of a registration statement required by this Section 4, during the period starting with the 30th day immediately preceding the date of the anticipated filing of, and ending on a date 135 days following the effective date of, the registration statement relating to such other public offering and (ii) if the Company has pending or in process a material transaction, the disclosure of which could, in the good faith judgment of the Board, reasonably be expected to materially and adversely affect the Company, the Company may postpone the filing (but not the preparation) of a registration statement required by this Section 4 for up to 90 days; provided, that, the Company shall at all times in good faith use its commercially reasonable best efforts to cause any registration statement required by this Section 4 to be filed as soon as possible. The Company shall promptly give the Holders requesting registration thereof pursuant to this Section 4 written notice of any postponement made in accordance with the preceding sentence. If the Company gives the Holders such a notice, the Holders shall have the right, within 15 days after receipt thereof, to withdraw their request in which case, such request will not be counted for purposes of this Section 4. 5. Registration Procedures. If and whenever the Company is required to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company will, as expeditiously as possible: (i) (x) prepare and, in any event within 60 days after the end of the period within which a request for registration may be given to the Company, file with the SEC a registration statement with respect to such Registrable Securities and (y) use its reasonable best efforts to cause such registration statement to become effective as promptly as practicable after filing; provided, however, that the Company may discontinue any registration of its securities which is being effected pursuant to Section 3 at any time prior to the effective date of the registration statement relating thereto; (ii) prepare and file with the SEC 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 for a period not in excess of 180 days and to 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 seller or sellers thereof set forth in such registration statement; provided, that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish to the Holders and to one counsel selected by the Holders of a majority of the Registrable Securities covered by such registration statement to represent all Holders of Registrable Securities covered by such registration statement, copies of all documents proposed to be filed (including, if requested, all documents to be incorporated by reference in such 7 registration statement, prospectus, amendment or supplement), which documents will be subject to the review of such counsel and the Company shall not file any registration or amendment or supplement thereto (excluding any document incorporated by reference in such registration statement, prospectus, amendment or supplement) if the Holders' counsel shall reasonably object, in writing, on a timely basis as to a matter affecting the liability of any Holder or the rights of the Holders under this Agreement; provided; that any such objecting party and the Company shall use their good faith efforts to resolve such party's objections on a basis reasonably satisfactory for such party and the Company which will permit such filing; provided, further, that nothing in this clause (ii) shall be construed to require the consent of any Holder or its counsel to the filing of any document incorporated by reference in any registration statement, prospectus, amendment or supplement; (iii) furnish to each seller of such Registrable Securities such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller; (iv) use its reasonable best efforts to register or qualify such Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each seller shall reasonably request, 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 Registrable Securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (iv), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (v) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities; (vi) notify each seller of any such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in clause (ii) of this Section 5, of the Company's becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of 8 copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (vii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable (but not more than eighteen months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (viii) use its reasonable best efforts to list such Registrable Securities on any securities exchange on which the Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement; (ix) enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as sellers of a majority of such Registrable Securities or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; (x) obtain a "cold comfort" letter or letters from the Company's independent public accountants in customary form and covering matters of the type customarily covered by "cold comfort" letters as the seller or sellers of a majority of such Registrable Securities shall reasonably request (provided that Registrable Securities constitute at least 25% of the securities covered by such registration statement); and (xi) make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such seller and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request in writing. 9 Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in clause (vi) of this Section 5, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by clause (vi) of this Section 5, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in clause (ii) of this Section 5 shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to clause (vi) of this Section 5 and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by clause (vi) of this Section 5. 6. Indemnification. (a) Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act pursuant to Section 3 or 4, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, the seller of any Registrable Securities covered by such registration statement, each affiliate of such seller and their respective directors and officers or general and limited partners (and the partners, members, directors, officers, affiliates and controlling Persons of each of the foregoing), each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such seller or any such underwriter within the meaning of the Securities Act (collectively, the "Indemnified Parties"), against any and all losses, claims, damages or liabilities, joint or several, and expenses to which any such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or (b) 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 in the light of the circumstances then existing, and the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon and in conformity with written information with respect to such seller furnished to the Company by such seller for use in the preparation thereof; and provided, further, that the Company will not be liable to any Person who participates as an underwriter in the offering or sale of Registrable 10 Securities or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, under the indemnity agreement in this Section 6(a) with respect to any preliminary prospectus or the final prospectus or the final prospectus as amended or supplemented, as the case may be, to the extent that any such loss, claim, damage or liability of such underwriter or controlling Person results from the fact that such underwriter sold Registrable Securities to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final prospectus (including any documents incorporated by reference therein) or of the final prospectus as then amended or supplemented (including any documents incorporated by reference therein), whichever is most recent, if the Company has previously furnished copies thereof to such underwriter. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any other Indemnified Party and shall survive the transfer of such securities by such seller. (b) Indemnification by the Seller. The Company may require, as a condition to including any Registrable Securities in any registration statement filed in accordance with Section 5 herein, that the Company shall have received an undertaking reasonably satisfactory to it from the prospective seller of such Registrable Securities or any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in subdivision (a) of this Section 6) the Company and all other prospective sellers or any underwriter, as the case may be, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information with respect to such seller or underwriter furnished to the Company by such seller or underwriter for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the prospective sellers, or any of their respective affiliates, directors, officers or controlling Persons and shall survive the transfer of such securities by such seller. (c) Contribution. (i) If the indemnification provided for in this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any claim or expenses referred to herein, then the 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 claim or expenses in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party from the issuance of the Registrable Securities and by any such indemnified party from the its sale of Registrable Securities in the relevant registration statement or, if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the indemnifying party and the indemnified party in connection with the actions which resulted in such claim or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates 11 to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 6(c) as a result of the claim and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any action or proceeding. (ii) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in Section 6(c)(i). 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. (d) Notices of Claims, Etc. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 6, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, that the failure of the indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subdivisions of this Section 6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. 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 to such claim or litigation. (e) Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 6 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. (f) Non-Exclusivity. The obligations of the parties under this Section 6 shall be in addition to any liability which any party may otherwise have to any other party. 7. Rule 144. The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted 12 by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Securities, make publicly available such information), and it will take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding anything contained in this Section 7, the Company may deregister under Section 12 of the Exchange Act if it then is permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder. 8. Miscellaneous. (a) Holdback Agreement. If any registration of Registrable Securities hereunder shall be in connection with an underwritten public offering, each Holder of Registrable Securities covered thereby agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144 under the Securities Act, of any equity securities of the Company, or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), within 7 days before or 90 days (or such lesser period as the managing underwriters may permit) after the effective date of such registration, and the Company hereby also so agrees. (b) Amendments and Waivers. This Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Holders of a majority of the Registrable Securities then outstanding. Each Holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any consent authorized by this Section 8(c), whether or not such Registrable Securities shall have been marked to indicate such consent. (c) Successors, Assigns and Transferees. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the parties hereto other than the Company shall also be for the benefit of and enforceable by any subsequent Holder of any Registrable Securities, subject to the provisions contained herein. 13 (d) Notices. All notices and other communications provided for hereunder shall be in writing and shall be sent by first class mail, telex, telecopier or hand delivery: (i) if to the Company, to: PRIMEDIA Inc. 745 Fifth Avenue 23rd Floor New York, NY 10151 Fax: (212) 745-0199 Attention: Beverly C. Chell, Esq. With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Fax: (212) 455-2502 Attention: Marni J. Lerner, Esq. (ii) if to Purchaser, to: Liberty Prime, Inc. 9197 South Peoria Street Engelwood, Colorado 80112 Fax: (720) 875-5382 Attention: Charles Tanabe, Esq. With a copy to: Baker Botts LLP 599 Lexington Avenue New York, NY 10012 Fax: (212)-705-5125 Attention: Robert W. Murray Jr., Esq. (iii) if to any other holder of Registrable Securities, to the address of such other holder as shown in the books and records of the Company, or to such other address as any of the above shall have designated in writing to all of the other above. All such notices and communications shall be deemed to have been given or made (1) when delivered by hand, (2) five business days after being deposited in the mail, postage prepaid, (3) 14 when telexed, answer-back received or (4) when telecopied, receipt acknowledged. (e) Descriptive Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. (f) Severability. In the event that any one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. (g) Counterparts. This Agreement may be executed in two or more counterparts, and by different parties on separate counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. (h) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to contracts made and to be performed therein. The parties to this Agreement hereby agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Agreement. (i) Specific Performance. The parties hereto acknowledge and 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. Accordingly, it is agreed that they shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which they may be entitled at law or equity. [Remainder of page intentionally left blank.] IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be executed on its behalf as of the date first written above. PRIMEDIA INC. By:____________________________________ Name: Title: LIBERTY PRIME, INC. By:____________________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----